3. Embrace greater collaboration

3. Embrace greater collaboration between the public sector and industry as a critical foundation for any future frameworks

There are many ways in which web3 technologies can meet or even improve upon existing standards and models. Regulators should encourage a forward-looking, collaborative relationship with industry participants. Where industry participants come together to collaborate in open forums on standards, we would encourage governments to consider ways to support and embrace such standards.

Governments should establish mechanisms to promote dialogue with industry stakeholders, to ensure a shared understanding of web3 technologies, including the role Central Bank Digital Currencies might have in the metaverse.

The borderless nature of blockchain technology complicates the challenge of navigating different regulatory frameworks and localization requirements. Governments have a critical role to play in aligning on a harmonized approach that considers the realities of blockchain technology and its applications, understands the applicable roles of various parties on the blockchain, and ensures responsible regulatory requirements are both effective and relevant.

We hope that more governments will consider establishing working groups at the national and multilateral level to work with and learn about new technologies from industry. There are already good examples of digital asset hubs in Switzerland and Singapore, where policymakers and regulators have created centralized channels to hear from digital asset businesses and work with stakeholders on developing sound, pro-growth policies. In the United States, financial services regulators have created innovation offices as entry points for innovators, and we hope that these can be further empowered to drive approval of new technology use cases and in the formulation of new rules. We believe that establishing robust channels between innovators and government agencies is essential to fostering innovation and creating a safe and transparent ecosystem for digital assets and the digital economy.

Since the metaverse will transcend national borders, it needs harmonized cross-jurisdictional public and private standards, norms and rules.

Like the internet, the metaverse will not be limited to use by people, small businesses and corporations from within defined, geographic parameters. The siloed nature of bordered approaches to regulation will impede interoperability and portability in the metaverse. Onerous requirements for local storage of data are particularly challenging for blockchain technology and its cross-border applications. Regulations should adjust for the borderless reality of blockchain technology, while enabling regulators to exercise their jurisdictional reach and allowing data to continue to flow. While it will be difficult to enforce the rights of certain data subjects when the blockchain is distributed and immutable, these are the very features that safeguard and validate the underlying data.

Sandboxes with clear entry and exit parameters could play a helpful policy role, particularly in areas that depend heavily on public-private sector cooperation, like proof of identity.

Fostering innovation and creating a safe and transparent ecosystem for digital assets and the digital economy requires establishing a robust channel between innovators and government agencies. This could take the form of regulatory sandboxes with clear exit criteria that allow industry participants to offer products to limited numbers of consumers in a more controlled environment.

As noted, proof of identity is an area ripe for this sort of collaboration between industry and government. In particular, we would encourage governments to consult with industry to establish standards for proof of identity. This could unlock payment and commerce experiences on a wide scale and bring greater numbers of people into the digital economy. We also recognize that it could carry new risks and believe regulatory sandboxes could play an important role in allaying these risks.

How Meta is applying this principle to promote economic opportunity.

The metaverse will only be successful if it is open, inclusive and built by a diverse group of people, businesses and creators. Achieving this goal requires standards, both at the foundational protocol level and for interoperable digital goods and content. This is why Meta co-founded the Metaverse Standards Forum, which has grown from 35 founding members in June 2022 to include over 1,800 organizations, all invested in building a metaverse that works for everyone.

Similarly, we are partnering with more than 100 organizations under the auspices of the World Economic Forum to define the parameters of an economically viable, interoperable, safe and inclusive metaverse.

We hope that governments will take note of these and other initiatives and engage with them when appropriate to identify opportunities for public and private sector collaboration.