Investment Migration in the Metaverse
Citi’s recent report, ‘Metaverse and Money: Decrypting the Future,’ estimates that the metaverse will become an $8 trillion market by 2030. This projection opens up a multitude of opportunities across industries, including investment migration.
Traditionally, residence and citizenship by investment programmes have provided high-net-worth individuals with access to additional jurisdictions, prestigious academic institutions, thriving business hubs, and lucrative real estate ventures. However, as the world transitions to a more virtual lifestyle, sovereign states must adapt and explore new avenues in the metaverse.
Which Countries Embrace a New Era of Governance?
Examples of countries taking the lead in metaverse diplomacy include South Korea, which is investing in a metaverse-based offering called Seoul, providing its citizens with a digital interface for public services. Barbados has gone a step further and established a diplomatic embassy in Decentraland, a virtual reality platform built on the Ethereum blockchain. Palau has also embraced the metaverse by introducing a unique concept called digital residency, which has attracted an astonishing number of applicants. These initiatives demonstrate that sovereign states can leverage the metaverse to attract global citizens, foster economic growth, and explore new possibilities for governance and diplomacy.
A Shift in Jurisdictional Power
The rise of metaverse citizenship has the potential to democratise the distribution of resources among nation-states. Small countries with limited physical resources can position themselves as attractive jurisdictions in the metaverse. By implementing e-governance policies, these nations can attract “metaresidents” or “metacitizens” who resonate with their values, ideologies, and laws. Sovereign metastates that offer robust legal infrastructures and favourable tax climates will empower their citizens to protect and preserve their wealth in digital assets.
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Challenges in the Metaverse
One of the challenges faced by sovereign states in the metaverse is how to tax economic activities in this digital ecosystem. Practical issues, such as the taxation of metaverse real estate transactions or capital gains, need to be addressed. The Organisation for Economic Cooperation and Development (OECD) is currently developing a crypto-asset taxation framework to tackle these matters and pave the way for a new reality.
