This is Not a Game: Blockchain Regulation and Its Application to Video Games

The use of blockchain technology as a financial instrument is often viewed with the same skepticism as emails from a foreign prince promising a portion of his inheritance for a “small” fee the recipient must pay for banking fees. Contrary to popular belief, there are various useful applications of blockchain technology, namely through the issuance and utilization of coins and tokens. “Tokens” are digital assets built on top of a particular blockchain, stored within the blockchain rather than through a central bank or regulatory authority, and provide a wider range of functions than that of Initial Coin Offerings. One of such functions include a potential utility in video games. This Article explains the basics of blockchain technology, the many types of blockchain tokens, coins, and the current blockchain regulations between the SEC and CFTC, including an analysis and discussion of the potential issues that arise from the gaps in regulation, and how the current regulations (and gaps) may be adjusted to suit the various types of tokens in a way that encourages the development of technology. Furthermore, the Article also provides other uses for blockchain technology such as improving aspects of a video game’s in-game economy, taking lessons from game developers who utilize certain tokens such as KarmaGames and Forte, as well as providing video game developers an alternative to monetizing video games long-term without using unsatisfactory monetization tactics such as “pay-to-win” or loot boxes