Yuan Zeng

　　Associate researcher of Shanghai University School of Law, doctoral graduate, and postdoctoral fellow, part-time researcher of the Legal Research Base of the Supreme People’s Procuratorate in Qianhai and the Guangdong Provincial Key Laboratory of Southern Ocean Science and Engineering (Zhuhai)

　　To be continued

　　1. The legal regulation of the metaverse space is still in the blank

　　Secondly, constructing the foundational currency system for the metaverse space

　　The Legal Challenges of Acquiring the Minting Power

　　IV. Legislative proposals for acquiring the coinage power in the new space

　　Conclusion

　　
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　　American author Neal Stephenson first proposed the concept of the Metaverse in his science fiction novel

　　The emergence of the metaverse has led to the trend of social governance towards digitization, technologization, and virtualization, but the unified rules for the governance of the metaverse are still blank, with a huge governance and regulatory vacuum. The digital divide between developed and developing countries in the digital era has further expanded, and the appeals of different interest groups are difficult to form a consensus. Under the objective situation of change, China needs to make use of its first-mover advantage in the digital economy field, grasp the core leading rights of the formulation of digital space rules and the future development direction of capital in the new round of digital economic development represented by the metaverse, and build a governance system for the digital space in advance and strengthen the key governance capabilities. In the field of digital infrastructure, the digital currency system promoted by the People’s Bank of China (hereinafter referred to as the central bank) in recent years has a natural advantage in the economic applicability of the metaverse space. Properly utilizing the technology and standards of digital currency will play an important role for China in constructing digital space trading rules, effectively utilizing global digital resources, maintaining digital space sovereignty, and promoting the growth of the digital economy.

　　1. The legal regulation of the metaverse space is still in the blank

　　The governance of the metaverse is a real issue

　　The metaverse has formed a parallel artificial digital space that is completely parallel to the existing physical space. Humans will enter a virtual civilization composed of codes through technical equipment and carry out various activities in this space that are the same as those in the physical world. Although the metaverse has received extensive attention, there is no unified definition of the metaverse in the academic community. It is generally believed that the metaverse is a digital space formed based on complex technical logic architecture – the true internet, specifically including the following seven layers of technical architecture: basic underlying technologies such as 5G, interactive layers such as smart wearables, decentralized systems such as blockchain, spatial computing layers, development tools, search layers such as social, and ultimate experience layers such as shopping. The metaverse space realizes data flow based on traditional internet but has produced new modes of production through immersive digital networks, forming a

　　The metaverse space is a new type of digital space of ‘virtual + reality’. Its original intention should be to strengthen the real world, improve the production efficiency of real life, and reduce costs. The governance of the metaverse space urgently needs corresponding governance standards and governance capabilities. The report of the 19th National Congress of the Communist Party of China put forward a clear requirement to

　　The competition for the right to formulate legal standards under the metaverse

　　The competition around technological innovation has expanded from entity leadership to standard leadership, as evidenced by the European Union’s establishment of influential regulatory digital domain rules such as the General Data Protection Regulation, to strengthen its potential impact on the global digital economy. With the enhancement of comprehensive national strength, China has actively participated in the formulation of international standards such as telecommunication technology standards in recent years, and put forward corresponding scientific proposals based on objective needs. However, some Western forces have always regarded the power to formulate standards, especially in key industries and key technologies, as an important means to suppress China’s development, leading to legal and regulatory challenges for Chinese enterprises in the process of industrial development and transformation. When traditional legal norms fail to adapt effectively to the objective development of the new technological revolution, the competition for the power to formulate legal standards is related to the competition for future development advantages and the control of the economic lifeline.

　　The construction of the metaverse requires strong digital infrastructure construction capabilities and digital technology accumulation advantages. China has a significant first-mover advantage in this field. To meet the development needs of the metaverse industry and even its civilization ecosystem, at least the following key issues need to be clarified by legislation: Firstly, the effectiveness of legal acts in the metaverse space. The mirror in the metaverse space needs to be linked to objective facts, and the logical intermediate layer linking the virtual space and the physical society is the laws and regulations. To what extent the acts or autonomous wills of humans entering the metaverse space have legal validity needs to be clarified by law. Otherwise, the metaverse space will have no distinction from the past online games. Secondly, the definition of data rights in the metaverse. According to the General Data Protection Regulation of the European Union, the Civil Code of China, and other laws, data has corresponding rights that have already been legally grounded. The realization of the metaverse is based on the computational power awakening of computers under technical conditions, and data will become the most critical element of social development in the metaverse space. Data, through continuous sharing and resharing, is no longer a one-time transaction or consumable, but a continuous link that generates circular value returns, creating new social spaces and survival logic for humans. Therefore, data in the metaverse space naturally has greater value. However, when the computational power in the virtual space is autonomously mined and used for massive space anonymous data by new technologies such as deep learning, artificial intelligence, and big data, the existing international legal adjustment framework is obviously unable to regulate decentralized and dispersed data utilization. Due to the lack of systematic regulations on ownership, usufruct rights, and other issues, the original important content such as legal interests infringement and algorithmic discrimination has no application. How to price the data owned and generated by natural persons, legal persons, and even countries in the metaverse space, and how to conduct transactions according to what value scale or standard, reflects the extent to which the will represented by law supports the metaverse, which will largely determine the real active degree and sustainable development prospects of the metaverse economy. Thirdly, the legal personality of virtual entities in the metaverse space. Humans simulate various virtual images through wearable devices to enter the metaverse space, but these images are different from simple ‘QQ show’ or role-playing games. They are natural persons who, with the help of new technologies such as artificial intelligence, engage in various actual labor and social activities in a virtual space that is almost identical to the real world. Whether such virtual entities can have legal personality is a fundamental issue facing the development of intelligent society. There are already commercial companies that replicate the images of departed relatives in the metaverse space, and with the enhancement of artificial intelligence, these images have the full actions and language patterns of humans. If the memory information of the human brain can be uploaded to the metaverse through brain-computer interfaces and become data that can be retrieved, then whether such self-thinking virtual entities have already become ‘natural persons’ in the metaverse? Whether the transactions made by this subject are valid? If the law recognizes that intelligent technology has legal personality, it will have a significant impact on the evolution of financial forms, economic and social development, and even human production and life.

　　The digital economy is an economic model that utilizes information transmission technology on electronic devices through the Internet. According to the

　　The metaverse space is a virtual existence formed by transforming various real entities in the physical world into data codes for computation, and it is also fed back to the real society through human activities. The digital economy empowers data, promoting the digitalization of assets. Traditional financial assets such as stocks, as well as personal biological information, can be digitized and become digital assets that can be traded in the metaverse space. All types of digital assets within the metaverse space have real-world prices. According to Business Insider, recently, a piece of virtual land on the virtual gaming platform Sandbox was sold for $4.3 million, setting a new record for the transaction price of ‘real estate’ in the metaverse. The innovation of the metaverse lies in its nurturing a whole new but strongly connected economic system with the real worldonline casino secretsJoin us. Users can obtain tokens by engaging in activities such as ‘playing games’ within the metaverse space, and these tokens can be legally sold on the open market to obtain compensation. Social media has become a new platform for the development of lottery and How to find it. This also determines that the future financial payment system needs to integrate with social media. However, the economic system of the metaverse must spill over into the real society; otherwise, it will have no essential difference from online games. This requires the construction of a matching payment and settlement system. Currently, the prices of Non-Fungible Tokens (NFT) artworks are continuously driven up by capital speculation. Non-Fungible Tokens are a new type of token that distinguishes from the fungible tokens like Bitcoin, where each Bitcoin has the same price and can be split for payment, but each Non-Fungible Token is unique and cannot be exchanged, which gives NFTs the pricing characteristics of artworks. NFTs are private properties that cannot be forged based on blockchain technology and can be freely traded and transferred. Due to the low-friction cost of cross-border fund transfers, the NFT trading market has accumulated a wide user base. Due to the impact of network externalities, that is, the marginal utility of the product to consumers is a function of the number of existing consumers, the development of Non-Fungible Tokens has already begun to erode the survival space of traditional sovereign currencies.

　　Data platform enterprises with technological advantages entering the financial field under the new space stimulate the development of digital technology commercialization, while posing a great challenge to the services and supervision of traditional finance. The metaverse space provides new business models and types of transactions, and the design of economic mechanisms under the metaverse is closely related to them. Currently, all financial activities in the metaverse are decentralized transactions. If the regulatory system and regulatory capacity cannot adapt to the risks of new technologies such as decentralized markets, economic activities in the metaverse space may likely reflect on the real economy, even triggering a global financial crisis. For example, there is a great difference in the regulatory stance of various countries on digital tokens including Bitcoin and NFT, which cannot form an effective unified regulation, leading to the fact that cross-border arbitrage and money laundering and other criminal activities have always been unable to be eradicated. The integrated artificial intelligence computing power in the metaverse space under the metaverse far exceeds that of traditional internet servers, and the frequency, types, and richness of transaction scenarios also exceed the regulatory content of existing laws. Accelerating the formulation and improvement of relevant regulatory rules for metaverse governance will give China a first-mover advantage and initiative in the digital economy field.

　　Secondly, constructing the foundational currency system for the metaverse space

　　Technological development is changing the financial and business models. With the popularization of personal terminal devices and high-speed networks, digital networks have covered the main population worldwide. The metaverse, as a large-scale digital space where humans may reside, combines social, entertainment, and labor attributes of multiple dimensions. The key to its development lies in the fact that no matter what behavior users perform in the metaverse, their identity and assets can be transferred and interacted with across multi-level online and offline platforms, making the virtual world more real and the real world richer, thus gaining a broader space for digital economic development. From the current status of the existing technology ecosystem, the metaverse economic system is rapidly developing in the direction of privatization and multipolarization. As a value exchange tool, currency plays an indispensable role in it, and the existing international order and economic system’s operation model may face systemic changes. Against this backdrop of great changes, using a centralized monetary system to consolidate the traditional power of the state in the decentralized digital space, and the state obtaining the coinage rights in the metaverse space, is related to the future development direction of the digital economy and the fundamental economic interests of the country.

　　The concept and significance of coinage rights

　　With the improvement of productivity, the form of currency has experienced stages from tangible goods, metal currency, credit currency to lottery and How to find it. As a payment tool, currency has features such as the endorsement of national credit and the legal validity of issuance and circulation. China issued the ‘Jin Bu Law’ during the Qin Dynasty, which is the earliest monetary legislation in the world still in existence. It stipulated the mandatory use of legal currency and the prohibition of other privately minted currencies, achieving the unification of domestic currency use. The right to coinage, which is the power to mint currency, is one of the most important powers of a sovereign government under the modern national system, and the currency itself represents credit. According to modern economic theory, the issuance of internationally accepted or highly marketable currencies can provide a stable source of seigniorage in the global economic system. Seigniorage refers to the difference between the cost of minting currency and its face value. In traditional economic systems, due to the government’s monopoly power over the printing of currency and the purchasing power of the printed notes, the government thus obtained profits in exchange for goods and services. Whether the collection of seigniorage is successful depends on whether the actual market demand for the currency can be effectively increased. Once the currency circulates abroad and is stored by another country, the seigniorage of that part of the currency is borne by the storing country. The U.S. Congress passed the ‘Legal Tender Currency Act’ in 1862, determining the paper currency circulation form of the dollar. Sixty percent of the dollar’s issuance is overseas, and 15% of the U.S. GDP comes from or is derived from the benefits of seigniorage. According to calculations, the average international seigniorage of the United States was 8.525 billion U.S. dollars per year from 1970 to 1980, and it reached 634.593 billion U.S. dollars from 2001 to 2010. Since the issuance cost of digital RMB is lower than that of paper currency, if it can occupy the primary position in the payment system of the metaverse and be widely used in trade circulation, the seigniorage benefits obtained by the central bank through the digital RMB system will become a stable source of income.

　　In addition to the substantial revenue from the coinage tax, the issuing countries of the common currency can gain an advantageous position in monetary policy through the payment and settlement systems, reduce the pressure of international debt input, control international capital flows, and profoundly influence the financial policy formulation of other countries. Currently, the global settlement currency and the foreign exchange reserves of various countries are mainly in US dollars. The US dollar policy can directly affect the fluctuations in the prices of major commodities in the world, causing global asset price fluctuations, posing challenges to the cost control of production for enterprises in developing countries, especially China and other manufacturing-oriented countries. The United States can benefit from this through a ‘scissors difference’. At present, the US dollar is in an absolute advantageous position in the world monetary system. In each of the economic crises of the contemporary era, the Federal Reserve has issued an excessive amount of money through quantitative easing policies, diluting national debt through ‘loosening the water’ and simultaneously reaping the wealth of other countries. Since the inception of money, competition has arisen among different currencies. Since the new technological revolution, digital tokens based on credit built on blockchain technology have begun to gradually erode the traditional currency credit constructed on the power of strong nations. Especially in the profound era background of the continuous over issuance and devaluation of the US dollar, the public has formed a subconscious expectation of inflation in traditional currencies, which is also one of the objective reasons why countries are competing to develop digital fiat currencies. The rapid progress of new technology has provided new solutions for currency trust and efficiency, and the way of international monetary competition has evolved from economic power to a technology-driven power. Utilizing the first-mover advantage of digital RMB issuance to enhance the status of the RMB in the digital economy, expand the benefits of our country’s coinage power, and it is of great significance for maintaining our country’s monetary sovereignty and financial stability.

　　Establishing the standard for the metaverse currency system

　　Due to the inherent defects of traditional currency and the anonymous and credible characteristics of lottery and How to find it itself, since the birth of Bitcoin in 2008, private lottery and How to find it markets based on decentralized and distributed accounting technology have begun to be established step by step. Due to the lack of legal tender status and other legal requirements, the existing lottery and How to find it can only be called tokens in legal terms, that is, non-officially issued folk agreements on ‘currency’, but such lottery and How to find it have objectively gained network recognition and improved transaction efficiency. The advocates of private lottery and How to find it theory believe that the factors of social instability come from inflation, and the root cause of inflation lies in the fact that the state monopolizes the minting power and inevitably provides an excessive amount of currency supply to meet the needs of governance. The forms and technical characteristics of private lottery and How to find it are diverse, and there is an intense free competition among them, while canceling the state’s minting power can effectively solve the problem of excessive currency issuance. From a technical perspective, private lottery and How to find it has the natural advantages of efficiency, anonymity, and security that cannot be compared with paper currency, and by linking to specific assets, it has realized cross-border transactions, value storage, pricing and payment, and other monetary functions. The popularity of its market reflects its partial rationality on the side.

　　However, the private monetary system cannot adapt to the metaverse space formed by global users, and the private legal attributes determine its objective defects. Firstly, the investment subjects for the transformation of the metaverse are basically giant internet companies, which apply their own payment networks in their respective developed metaverse platforms. Acquiring the currency issuance power in the new space will undoubtedly allow enterprises to reap huge profits and become the actual ruler of the metaverse space. But private lottery and How to find it has the natural defects of high uncertainty and weak risk resistance, and is often used for financing of terrorist activities, cross-border gambling, tax evasion money laundering, and other criminal activities, which greatly increases the cost and risk of governance due to the profit-seeking nature of capital. Secondly, the subject of issuing private currency is unknown, lacks the endorsement of national credit, and it is difficult to reach a collective consensus on the currency, making it impossible to maintain currency value stability. Although sovereign currency has some disadvantages in terms of low efficiency in some payment and settlement fields in the digital economy era, the unified currency achieved through the power of the state and the legal system still improves the overall economic efficiency and stabilizes social credit. Sovereign currency emphasizes the legal tender nature of currency, aiming to distinguish legal currency from such agreed currency, thereby serving as an effective equivalent. Thirdly, under the metaverse space, the concept of national borders and other geographical boundaries is more blurred, and cross-border economic activities carried out within the metaverse are more lacking in effective multilateral agreement supervision. For regulators, this raises the threshold of supervision, but for natural individuals, it lowers the threshold for obtaining equipment and improves the accessibility of general resources, making it easier for individuals to circumvent supervision. According to the white paper on the Research and Development Progress of China’s Digital RMB released by the People’s Bank of China in July 2021, the launch of global stablecoins by commercial institutions will bring great risks and challenges to the international monetary system, payment and settlement system, monetary policy, and cross-border capital flow management.

　　The private lottery and How to find it has its insurmountable disadvantages, and the traditional monetary system cannot adapt to the needs of the metaverse economy. Therefore, digital fiat currency with the underlying architecture of blockchain technology can serve as the standard monetary system under the metaverse space. Compared with private lottery and How to find it, digital fiat currency has irreplaceable advantages in terms of overall security and efficiency of use, especially in terms of credibility, as digital fiat currency is backed by national credit, ensuring currency value stability and orderly capital flow. Compared with traditional currency, the digitalized fiat currency as a payment tool is more flexible and efficient, and has strong follow-on technological advantages in financial activities, digital tax collection, cross-border (space) payments, and other uses. In particular, the digital fiat currency account needs to be linked with the user’s identity information, and effective identity verification will effectively solve the disorderly risk of governance in the metaverse space. Based on the above objective reasons, establishing an effective digital fiat currency system standard in the metaverse space is realistic, rational, and urgent.

　　The currency choice for maintaining national interests

　　As a general equivalent, money requires the joint use of many users to perform its monetary function. Based on this characteristic, the use of money exists a ‘Matthew effect’, that is, the strong become stronger. When a certain currency gains wide recognition in a certain field or geographic area, it will be extremely difficult for other currencies to enter. After the formation of a usage barrier, the conversion between money and other currencies will produce a significant friction cost. Payment channels also have the same characteristics. After Alipay and WeChat Pay have occupied the mobile payment market in our country, new payment tools will find it extremely difficult to attract users to compete. In terms of macro, the metaverse space is an important component of the digital economy. At the beginning of the development of the metaverse, competing with other currencies for potential users will give the digital RMB a first-mover advantage and experience advantage. The early layout of the digital RMB is also an important means for our country to compete for the right to formulate governance standards in the metaverse space. In terms of micro, the digital RMB does not need to undergo operations such as currency exchange, has high clearing efficiency, and low transaction costs. Its legal currency attributes and technological advantages are suitable for use in payment and settlement in the dual exchange between the metaverse space and the real world society, which helps the digital RMB system accumulate more network users and obtain a strong position in the payment channels of the metaverse space.

　　After obtaining the minting rights of the metaverse space or the advantageous position of the payment system, at least one can obtain continuous returns in aspects such as the market entity credit evaluation, financial rule formulation, and pricing of commodities. More importantly, it is necessary to firmly grasp the sovereignty of cyberspace—referring to the country’s independence and autonomy in managing and utilizing its own data without interference from external forces. Sovereignty is the premise for the generation and application of international law, and the sovereignty of cyberspace is the most concentrated manifestation of national interests in the new development space. China’s National Security Law and Cybersecurity Law both explicitly stipulate the maintenance of cyberspace sovereignty. The Internet originated in the United States, and the strong technological foundation of the United States enables it to possess powerful cyber power. The early architectural path, resource allocation, and legal jurisdiction of internet development were basically in the hands of the US government, and the security and development of the internet in various countries were constrained by this. Data is the most important basic element under the metaverse space, and data sovereignty directly affects the sovereignty of cyberspace. The legislative provisions of data localization are a common legal means for developing countries to safeguard their rights to develop cyberspace. While developed countries encourage the free flow of data based on a higher level of technological strength and digital infrastructure, they strive to seize the international market to the maximum extent. The digital RMB system is built on the underlying technology of blockchain, and its circulation and settlement are accompanied by valuable data resources containing information about transaction entities and capital flows. The central bank of our country is in a central position in the issuance, use, and storage of digital RMB, and through the intelligent mining of digital RMB data, our country gains more network basic resources and masters a vast amount of high-value information in the competition of the metaverse space. By promoting the construction of the hardware and software facilities of the digital RMB system, it drives the formation of governance advantages in the metaverse space to break the traditional network hegemony and maintain the national cyberspace sovereignty and development interests.

　　Restrictions on the power of digital platforms

　　According to the views of Mark Zuckerberg, the president of Facebook company (Meta), the metaverse requires standard setting and privacy protection. As the next generation of the Internet, it has the following basic characteristics: first, there should be only one metaverse globally; second, the metaverse cannot be exclusively enjoyed by an individual or a company; third, the metaverse should remain open, allowing any brand of device to connect to the metaverse; fourth, there will be data marks in the operations of users within the metaverse space, that is, human activities can exert an impact on the metaverse; fifth, the metaverse provides immersive virtual reality, which can provide humans with a real sensory experience. However, the current fact is that the development platform and innovative technology of the metaverse space are always controlled by a few giant Internet technology companies. The uneven distribution of interests and the profit-seeking nature of capital make it impossible to effectively release the tension of technological innovation. Especially, the control of payment channels and metaverse currency by private enterprises has made the strength of monopolistic enterprises continuously increase. Private data platform enterprises have interfered with the sovereign states’ power control over the next-generation cyber space, and the goal of building an open metaverse space also lacks an effective governance foundation. Against this backdrop, to promote the governance transformation of the metaverse space, it is necessary to rely on strong technological advantages and national strong measures to establish a stable payment channel and provide digital fiat currency products, so as to control the value elements of the metaverse space and regulate the unlimited expansion of digital platform power. Digital RMB, issued by our central bank, is the central bank’s liability to the public, and it has the basic functions of a monetary value scale, a medium of exchange, and a value reserve, realizing the transfer of value in digital form. Commercial banks and licensed non-bank payment institutions can participate in the digital RMB payment service system. Due to the core position of the central bank, it has the ability to control technology and data, and public services such as government affairs will be easier to reach different spaces under the premise of safety and controllability, realizing the anti-monopoly purpose of restricting the power of digital platforms.

　　Under the new technological revolution, data has become the most important factor of productivity. Currently, the competition among data platform enterprises is actually a competition for data traffic. Tax collection on data usage and circulation transactions is an important means for countries to legislate restrictions on the power of data platforms. ‘Minimum Tax Rate Limit’ and ‘Digital Services Tax’ are the two common practices currently. For example, to combat cross-border tax evasion and avoidance, the Group of Seven (G7) has set up a global minimum corporate income tax agreement of 15%, but due to the fact that the transaction targets and places in the metaverse occur on the data chain, the concept of cross-border is blurred, and traditional tax rules cannot be directly applied. ‘Digital Services Tax’ is levied on the operating revenue based on user data, with the country where the user is located collecting the corresponding proportion of taxes from the enterprises using the data. This tax type belongs to unilateral taxation and has the risk of double taxation and international conflicts. The development of the digital economy is significantly different from the existing tax law framework, and the effectiveness of the tax law lies in the taxability of economic activities. Compared to technological innovation, the supposed tax law provisions such as the subject of taxation, tax rate, taxable elements, and avoiding double taxation cannot be covered in the metaverse space. In particular, the establishment of a unified information management platform for taxation is necessary, as transaction behaviors and tax-related information under the private currency system are obviously not within the grasp of tax authorities, leading to poor taxability of economic activities in the metaverse. Taxation power is one of the main contents of national economic sovereignty, and the collection of digital taxes should conform to the basic characteristics and economic laws of the metaverse. Therefore, it is more realistic for the state to lead in establishing a unified data supervision platform. While the digital RMB system has the characteristics of traceable information and operational transaction networks, it does not require the establishment of a separate tax information platform for taxation, and can effectively respond to the adjustment of interest structure and tax rights distribution in the metaverse space on the basis of a wide user base.

　　The Legal Challenges of Acquiring the Minting Power

　　Due to significant differences in positions on the distribution of interests in the digital economy, asset supervision, monopoly and anti-monopoly between countries and interest groups dominated by giant data platforms, it has led to conflicts in relevant governance rules. Currently, there is no convention or soft law for the application of lottery and How to find it, especially for digital fiat currency. If it is expected to achieve cross-border and cross-space applicability of digital RMB in the metaverse space and real physical society, utilizing the advantages of core technology and user base to expand the international influence of systemic standards, at least several legal challenges need to be solved.

　　Determination of Data Monopoly Status

　　In the context of the new information technology revolution, data is the most important asset and productivity factor. If a digital fiat currency system covering the global Internet is built in the metaverse space, the first problem faced is the determination of the data monopoly status. Digital RMB is the digital form of RMB cash, based on network payment settlement, and has powerful regulatory functions such as inquiry and traceability. Although the digital RMB account adopts an anonymous, controllable loose coupling method, the People’s Bank of China undoubtedly occupies the central position in the flow of financial data and has the ability to use it, while commercial banks and financial institutions with authority will also obtain a certain degree of power status. In this case, how countries will determine the status of the People’s Bank of China and other institutions is an unknown but must be faced legal issue. In recent years, the European Union has continuously legislated to increase the打击 on digital monopolies, and the European Commission has the power to accuse data platforms. Its anti-monopoly involves both horizontal cooperation monopolies of data platforms and vertical upstream and downstream data monopolies. Central banks have never been regarded as subjects in a data monopoly position before, but if the digital RMB system can be applied in the metaverse space, there will be actual possibilities of monopolizing financial data in both horizontal payment and settlement fields and vertical supply chain fields.

　　The European Union, in order to break the monopoly of data platforms on the digital economy, issued the draft texts of the Digital Services Act and the Digital Market Act in December 2020 to defend European digital sovereignty and protect the basic rights of data service users. The Digital Services Act sets risk management obligations and external audit systems for data platforms with a wide audience and significant social risks. The central bank obviously cannot accept external audits, especially those from other countries, which has caused great difficulties in building the cross-space applicability system of digital RMB. Compared with the General Data Protection Regulation, the draft of the Digital Market Act emphasizes the control of specific giant data platforms such as ‘gatekeepers’. Such ‘gatekeeper’ enterprises control platform services such as search and social media, which enable them to have corresponding data power, interfering with the development of small and medium-sized enterprises and technological innovation. If the draft is implemented, the European Commission will have the power to determine the ‘gatekeeper’ blacklist without legislation, and restrict their entry into the European market. If it involves the transfer of monetary sovereignty, the European Union is very likely to set up a prohibited list for the entry of digital RMB.

　　The applicability of the Digital RMB system also includes the construction of corresponding digital space infrastructure globally. Its applicability will enable China to obtain more comprehensive and efficient market information and transaction data, but it may also touch upon the provisions of domestic laws of various countries on data protection. The General Data Protection Regulation (GDPR) of the European Union has made regulatory restrictions on cross-border data flow, allowing data to leave only under the following circumstances: first, personal data after the assessment of ‘adequate protection’; second, the recognition of multinational corporations with formal legal status ‘binding corporate rules’, realizing data flow within enterprises under supervision; third, the use of ‘standard contracts’ passed by the European Commission between enterprises, determining data protection rights and responsibilities after data flow. Against this background, the central bank faces great compliance pressure after implementing the Digital RMB in the metaverse space, and is easily judged as abusing market dominance and intervening in cross-border data protection. In addition, when the Digital RMB is used for payment in the metaverse space, it also needs to solve specific issues such as identity information data recognition and sharing among different entities, privacy protection, etc. The provisions of data protection in various countries are quite different, and appropriate legal arrangements need to be made from the perspective of market interest distribution.

　　The threat of ‘long arm jurisdiction’

　　The US dollar holds an absolute dominant position in the existing international monetary system. It is the main settlement currency for China’s foreign trade, and Chinese enterprises rely on the US-led banking system for transactions and settlements. In a specific historical period, the US dollar system played a significant role in helping China integrate into the global economic system. However, the dependence on the US dollar payment path, debt expansion, currency fluctuations, and even the transmission of economic crises have all posed financial risks for China’s future development. The US New York Clearing House Interbank Payment System (CHIPS) under the supervision and control of the US government, along with the Society for Worldwide Interbank Financial Telecommunication (SWIFT), occupy the main network and payment channels for global trade settlements. In recent years, the US has frequently used its dollar dominance to cut off the international settlement channels of other countries to achieve its legal and policy ‘long arm jurisdiction’, and has continuously realized seigniorage benefits through quantitative easing (QE) policies. However, the US dollar payment system has inherent defects such as multiple payment levels, complex procedures, and low efficiency, severely compressing the survival space of other countries and entities under the US dollar system. After the 2008 financial crisis, China began to establish the Cross-border Interbank Payment System (CIPS) in Renminbi, trying to decouple from the US dollar in foreign trade and carry out international trade pricing and settlement, in order to counter the threat of US ‘long arm jurisdiction’. However, the applicability of the CIPS system under the US dollar system faces strong resistance from the existing capital structure, and is not enough to change the reality of the weak competitiveness of Renminbi internationalization. According to the monthly statistical data of Renminbi released by the Society for Worldwide Interbank Financial Telecommunication on August 19, 2021, as of July 2021, Renminbi accounted for only 2.19% of the global payment total, which is seriously inconsistent with China’s economic strength and development interests.

　　Utilizing the digital RMB to obtain the payment system of the metaverse space, it expands the development space of the RMB in a misplaced way, constructs the global cross-border payment infrastructure, and is of great significance in counteracting the ‘long arm jurisdiction’. The digital RMB can help global network users form a barrier-free payment and transaction system within the metaverse space, and can limit disruptive forces outside when facing sovereignty security threats or economic crises. The United States also tries to use financial technology to form a new driving force for the development of the digital economy, promoting financial innovation in the currency field based on computer technology and computing power advantages. For example, the环球同业银行金融电讯协会(SWIFT) launched a financial product named SWIFT GO in 2021, which is used for high-efficiency small cross-border payments and aims to establish a new standard in the cross-border payment field. In the field of lottery and How to find it, the United States encourages the use of stablecoins linked to the US dollar to strengthen its currency status. In the process of obtaining the minting rights in the metaverse space, the digital RMB still faces multiple dilemmas of compliance, legality, and external forces’ expansion and intervention. As the issuing and supervisory authority of the digital RMB, the jurisdiction of the central bank should theoretically be limited to the sovereignty of our country. However, when it is widely applicable in overseas and digital spaces, it needs to face practical problems such as extraterritorial applicability and jurisdictional conflicts. In terms of financial data, the United States clarified in 2018 the provisions of the extraterritorial legitimate use of data law, stating that the US government has the right to retrieve global data under the control of its data controllers, realizing the expansion of data sovereignty. According to the provisions of US law, data generated by the use of the digital RMB within the United States are under its jurisdiction. If all countries refer to this regulation to formulate domestic laws, the expansion of its jurisdictional scope will inevitably lead to conflicts with the sovereign attributes of the digital RMB, especially as the data security of the digital RMB directly concerns the overall security of our financial system. Strengthening the coordination of international and domestic laws in the digital space to ensure the moderate exercise of jurisdictional rights in the field of the digital economy has become an unavoidable reality.

　　The change in the way rights and obligations are realized

　　Under the metaverse space, the social structure has undergone significant changes. The social form within the metaverse space is based on immersive internet technology and integrates various engineering technologies. Humans will become accustomed to switching between the digital civilization society and the traditional offline societysports betting local and How to find it. The governance of the metaverse space has gradually been infiltrated by code and algorithms, and any individual may be dataized, while rights and obligations are automated. Under the traditional model, rights and obligations should be reflected in paper contracts and must be read and understood by the parties before action and externality are generated. This model requires a lot of time and energy and is not suitable for the complexity of life scenes and the complexity of interactions brought by data networks. Under blockchain technology, digital currencies such as Bitcoin achieve transaction reconciliation through smart contracts, and smart contracts, based on the trustworthiness of the general ledger, achieve the execution of rights and obligations and contracts. In decentralized autonomous corporations (Decentralized Autonomous Corporation, DAC), corporate governance matters such as equity,债权, and debt are controlled in the form of lottery and How to find it. Digital renminbi is believed to have significant advantages in terms of supervising the compliance of capital flow and improving transaction efficiency, but the operation of digital renminbi on the blockchain also involves civil rights changes on the blockchain. The existing legal system and legal methods are temporarily unable to meet the needs of automatic operation of law on the chain, forming a certain degree of constraint on the extensive application of digital renminbi.

　　For example, placing programmatic advertisements in the metaverse space can yield huge profits, but the vast majority of customers’ privacy rights are threatened by excessive rights claims by terminal device software. In the face of data scraping and other parasitic, symbiotic big data technologies, ordinary users, even if willing to maintain their own privacy rights through traditional legal means, have no ability to penetrate such technologies as individuals. The legal regulation of such high-frequency, high-repetition scenarios is still weak, and traditional legal technology means have become inadequate in the new technological environment. Building a payment system for the metaverse space with digital renminbi faces new challenges in the existing legal system for the protection of personal privacy and the adjustment of civil relations.

　　IV. Legislative proposals for acquiring the coinage power in the new space

　　Formulate a special law for digital RMB

　　The issuance of digital RMB carries multiple tasks, including the construction of a modern central bank system, the improvement of the monetary supply mechanism, and the perfection of the market-oriented interest rate formation and transmission mechanism. China’s development of digital RMB, especially the expansion of the RMB system in new spaces such as the metaverse, has the advantages of digital infrastructure construction and digital technology. The Central Bank issued the People’s Bank of China Law (Revised Draft for Comments) (hereinafter referred to as the ‘Opinion Draft’) in October 2020 and solicited opinions. Article 19 of the ‘Opinion Draft’ explicitly stipulates that the RMB includes both physical and digital forms, providing an institutional foundation for the legal inclusion of the issuance and circulation of digital RMB. This article determines the legal nature of digital RMB, i.e., the digital cash of the RMB, indicating that digital RMB is only a substitute for M0 (circulating cash). It is suitable for the small-scale, high-frequency, and scaled scenarios in the metaverse space. While significantly reducing transaction friction costs, it effectively expands the breadth and methods of application of digital RMB, quickly narrowing the distance between users in the metaverse space and financial and economic services under the digital RMB system.

　　However, the legal status of digital RMB is only stipulated in the People’s Bank of China Law, which cannot cover the complex legal issues that may arise from the cross-border and cross-space application of digital RMB. For example, the rapid conversion rate of digital RMB may lead to a squeeze effect on deposits, causing commercial banks to be unable to effectively expand credit money through the issuance of loans, which directly affects the adjustment of China’s monetary policy. For instance, the establishment of the digital RMB system requires the construction of high-standard payment and settlement systems at home and abroad. If the rights and obligations of the central bank and financial institutions cannot be clearly defined through legal means, it is very likely to face the compliance review of other countries’ governments on the cross-border application of digital RMB without effective domestic laws to counteract. Moreover, the metaverse space blurs the boundary between the virtual and the real, but the existence and behavior in the metaverse space are all reflected in the real society. Under these special conditions, how to determine the supervision standards for the circulation and use of digital RMB will directly affect how the law adjusts real legal relations. Article 22 of the ‘Opinion Draft’ explicitly stipulates that China prohibits any form of digital token. However, countries like Japan treat digital tokens like Bitcoin as means of financial payment. Currently, the metaverse space uses digital tokens. Between the differentiated legal provisions and the objective demand of reality, how to determine the leading legislative norms to achieve multilateral recognition within the cross-space scope requires the formulation of a special law on digital RMB for issuance, circulation, supervision, and clear regulation of rights and responsibilities, and to make corresponding arrangements in line with the rapid development of technology, so that other countries or entities can obtain clear legal adjustment expectations before scaling up the use of digital RMB.

　　The Metaverse economy is an important component of the digital economy, and its governance is directly affected by the governance model and standards of the digital economy. In combination with the actual situation of digital economy governance and future development plans, it is at least necessary to clarify several aspects of governance rules: Firstly, increase restrictions on giant data platforms. Based on the development scale and power expansion of giant data platforms, for any platforms under their control that issue currencies or tokens with monetary functions, strict prohibition is required in accordance with Chinese laws and regulations within our country. For the trading of digital tokens overseas, the minimum connection principle determined by the U.S.

　　Enhancing international legislative collaboration in the new space field

　　The metaverse space is a highly interconnected new development space. Distributed ledger technologies such as blockchain constitute the foundation for the existence of digital assets globally. New information technologies have further deepened the tightness of global economic connections, but conversely, they have also accelerated the transmission speed of macroeconomic risks, especially sudden economic crises. To effectively apply the digital RMB system in the metaverse space, it is necessary to form a consensus worldwide.

　　Firstly, exploring the establishment of a digital financial regulatory framework under limited sharing. Under the digital RMB system, financial data will become the most important digital mineral in China’s governance of the metaverse space. The Cybersecurity Law and Personal Information Protection Law of China have localization requirements for the collection and generation of personal information by key information infrastructure operators within the country. However, to achieve cross-border financial regulatory cooperation, the first challenge is to coordinate the regulatory requirements of financial data among countries and whether to transfer part of the desensitized financial data management functions. Considering the broad application of the digital RMB and the objective reality of each country’s maintenance of its own interests, Article 52 of the ‘Opinion Draft’ stipulates that the central bank can cooperate with overseas regulatory authorities under the premise of national security, confidentiality, and other laws and administrative regulations, share regulatory information, and implement cross-border supervision. While respecting the monetary sovereignty of other countries and reasonable regulatory requirements, it is considered to establish a unified口径 financial data regulatory mechanism for the metaverse space under the digital RMB system.

　　By occupying part of the payment channels in certain fields, China has gained a greater first-mover advantage. After the 2008 financial crisis, China adopted a variety of measures, including signing currency swap agreements, to change trade settlements to local currency settlements, providing timely liquidity support for normal economic and trade activities. Currently, all major economies except the United States have basically signed bilateral local currency swap agreements with China. After the launch of the digital RMB, expanding the scope and types of currency swaps, including countries and regions with extensive trade with China into the digital RMB system, will enhance the liquidity of the RMB in the metaverse space. At the same time, to compete with private stablecoins, it is necessary to make full use of China’s advantages of complete supply chains, rich industrial accumulation, and a large number of participants in import and export trade. Creating an excellent rule-of-law business environment to encourage the market to choose the digital RMB as a payment and settlement method is crucial. Considering the strategic needs of the European Union to re-emerge in the field of digital technology, under the requirement of ensuring the data sovereignty of the digital RMB, we should expand cooperation with the EU in the field of metaverse economy, taking advantage of the technical advantages of the digital RMB to compete with the US for precious survival space.

　　Thirdly, it is necessary to improve the overall security of the digital RMB system. The cross-border and cross-space payment system involves more complex risk factors such as infrastructure support, software computing power matching, and network security compared to traditional paper money and payment settlement systems. As a digital legal currency with national credit backing, the digital RMB must ensure the absolute security of related technology and the relative convenience of actual operations. If the digital RMB system is infiltrated by other forces or experiences large-scale outages and other emergencies, it may directly affect the overall security of China’s financial system and the foundation of national credit. Therefore, it should be legislated to ensure that core technologies and standards are in the hands of the central bank and relevant functional departments, and to build a metaverse currency experimental area and application scenarios that are suitable for the characteristics of the digital RMB. After completing the ‘regulatory sandbox’ test, the new products of the digital RMB system should be cautiously promoted to ensure the absolute safety and controllability of the digital RMB system.

　　Conclusion

　　The renaming of Facebook’s parent company to Meta does not mean that the metaverse has been realized. Facing the ‘major changes unseen in a century,’ as a new immersive internet that carries the direction of digital economic development, the industrial layout of the metaverse has been included in local plans such as the ’14th Five-Year Plan for the Development of Shanghai’s Electronic Information Industry’ released in January 2022. The widespread application of new technologies such as the Internet of Things, blockchain, and 5G communication technology has provided the metaverse with a realistic foundation for innovation and development. The metaverse space formed based on technology, which is both distinct from and widely connected with the physical society, expands the span of human existence and interaction, and is likely to profoundly change the development trend of the future world and even the form of human civilization. The construction of the metaverse requires underlying technology, digital infrastructure, and various complex specifications and standards. In the foreseeable future, the metaverse will become a major area of competition for digital economies in various countries. Gaining the discourse power and part of the rule-making power in the metaverse space economy, proactively building a governance system for the digital space and strengthening key governance capabilities will greatly expand a country’s leading capabilities in global digital economic development and obtain capital gains from being the first mover. The biggest difference between the metaverse and traditional internet is that the actions taking place within it will be connected with the real world. Everything existing in the physical society can be mapped to the digital space through digital technology, and the most frequent and effective tool for linking the physical society with the metaverse is currency. Most of the current fields in the metaverse space are still in a governance vacuum. Trying to promote a digital RMB system with technological, market, and national credit advantages, to obtain a leading position in cross-border and cross-space payment systems in the metaverse space and the physical society, is of extremely important strategic significance for the development of digital economy applications in our country, enhancing the core competitiveness of the RMB, and enhancing the resilience of cross-space supply chains and capital chains.

　　Currency as a general equivalent, once it has the universality of application within a larger range, the issuer will obtain corresponding coinage benefits, especially the right to formulate rules for economic and financial activities. The technical advantages and scale application advantages of digital RMB make it suitable for the application in the metaverse, competing with other tokens including Libra and NFT for potential users in the metaverse space. Due to its advantages in terms of issuance cost and efficiency, if digital RMB can obtain a payment advantage position in the metaverse space while effectively avoiding ‘long arm jurisdiction’, China can obtain extremely stable coinage tax benefits. More importantly, the extension and application of digital RMB hardware and software, accompanied by standard applications including China’s legal norms, can contribute Chinese solutions to the coordination of rules for metaverse data governance, data flow, and data supervision. However, in the process of promoting and using digital RMB in the metaverse space, there are corresponding legal risks that need to be anticipated in advance. Non-traditional legal issues such as identity data identification, data sharing, data platform restrictions, and cross-border financial supervision arising from the issuance and circulation of digital RMB all need to be studied and solved by legislation. Since digital RMB is backed by the national credit, if problems arise due to design defects, bank runs, or cyber attacks, it will have a corresponding impact on the overall credibility of the digital RMB system and even the national credit of China. Therefore, it is necessary to carry out experimental applications of digital RMB in the metaverse currency scenario in advance, and cautiously promote the application of new digital RMB products under the standard of ensuring the safety and controllability of the digital RMB system. It is recommended that in the competition with stablecoins and other digital tokens, respect the monetary sovereignty of other countries, strengthen international cooperation, and formulate long-term legal plans around the internationalization and spatial application of the RMB, promoting the healthy development and virtuous cycle of the metaverse space while ensuring China’s financial sovereignty and security.