November 20, 2018

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Legal Issues With Blockchain-Based Crypto Games and Collectibles

The use of blockchain technology for crypto games, such as CryptoKitties, and other token-based digital collectibles is on the rise. Also growing is the number of tokenized-assets marketplaces such as Rarebits and cryptocurrency designed specifically for gaming, such as Enjin Coin. These innovative platforms are leveraging the power of blockchain technology as applied to games and other interactive entertainment.

As is always the case with cutting edge technology and business models, a number of potential legal issues may be lurking of which many companies may not be aware. In the crypto world, most of the regulatory focus is on initial coin offerings (ICOs), as over $6.6 in token generating events already have occurred in 2018. However, many of the potential regulatory issues with ICOs and other legal issues could apply to blockchain-based crypto games and collectibles. Little attention has been paid to these issues.

For example, in some circumstances, crypto game tokens could be securities and token marketplaces could be securities exchanges. Additionally, if not structured properly, these offerings could constitute gambling and/or require money transmitter licenses.

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.

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About this Author

James Mattinson Blockchain Technology and Digital Currency Lawyer Sheppard Mullin Washington DC
Partner

Jim Gatto is a partner in the Intellectual Property Practice Group in the firm's Washington, D.C. office. He is also Co-Team Leader of the firm's Digital Media Industry and Social Media and Games Industry Teams, Blockchain Technology and Digital Currency team, and Team Leader of the firm's Open Source Team. 

Areas of Practice

Mr. Gatto leverages his unique combination of nearly 30 years of IP experience, business insights and attention to technology trends to help companies develop IP and other legal...

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