Valve recently announced that games and applications using blockchain-based cryptocurrencies or Non-Fungible Tokens (NFTs) cannot be published on its Steam distribution platform. As the world’s largest digital video game distribution platform, Steam’s ban has stirred the debate on the viability of blockchain technologies and how blockchain-based games will be distributed.
The announcement came as part of an official update to the Steam developer guidelines. The guidelines now prohibit the distribution of applications or games that use blockchain technologies that issue, allow the exchange of, or incorporate cryptocurrencies or NFTs. While Steam has not provided a reason for this ban, its decision comes at a time when stakeholders in the videogame industry are navigating how, if at all, U.S. gambling and consumer protection laws apply to these technologies, and if society generally accepts and understands them.
Following Valve’s announcement, Epic Games founder and CEO Tim Sweeney previewed that Epic Games may take a competing stance on blockchain technologies. More specifically, Epic Games Store “will welcome” games that incorporate blockchain technologies if such games comply with applicable laws and regulations, disclose their terms, and are age-rated by an appropriate group. Sweeney clarified that Epic Games is not currently considering incorporating NFTs into its own games.
With these announcements, video game distribution platforms have become the latest entrant in the debate on the viability and legality of blockchain technologies. Other members of the debate include various governments, including the U.S. federal and state governments, China, and Thailand amongst others. (Notably, China has criminalized all cryptocurrency transactions and the Thailand SEC banned digital exchanges from listing or providing services related to cryptocurrencies or utility tokens that could be deemed a meme token, fan token, NFT, or digital token.)
We suspect that gaming distribution platforms, like Steam, are tempted to ban blockchain-based games because they believe these technologies may trigger U.S. gaming and gambling laws in a way that they cannot control. However, there is nothing inherently unlawful about using blockchain technologies. Rather, legal risk depends on how they are implemented into games and gaming ecosystems. For example, game developers must assess whether cryptocurrencies or NFTs are being used solely to try to get around gambling laws that would forbid the use of something of value – in which case such tactics may be ineffective. But there may be other uses that are perfectly legal, especially in free-to-play games. Accordingly, distribution platforms may want to – after consulting counsel – consider a more nuanced position on these issues.