Web3: The Next Frontier: Rights and Asset Ownership in Blockchain Games

Blockchain promised to rewrite the gaming industry: to add transparency and to give players rights over virtual assets they had never held before. Non-fungible tokens (NFTs) and smart contracts were meant to reshape how in-game property is owned and how game economies work. On the wave of the "play-to-earn" model, billions of dollars flowed into Web3 gaming projects between 2021 and 2023, and gaming established itself as one of the leading sectors of Web3.

By 2026, that wave has receded — but the question it was all built around has not gone away; if anything, it has become sharper. Who actually owns virtual assets, and how that ownership is protected, is now decided not by a project's pitch deck but by the enacted law of several jurisdictions at once. While the industry lived through its boom and bust, Japan, the UAE and Hong Kong turned a patchwork of draft rules into statutes. For a studio structuring a blockchain game today, that is the real change: the legal framework has stopped being a hypothesis.

What's Left of the Play-to-Earn Boom

The bet that mainstream players would embrace token-based ownership did not pay off at scale. According to research by Caladan, reported by CoinDesk, roughly 93% of GameFi projects were effectively dead by 2026 — after as much as $15 billion had been invested in them. Game-token values fell about 95% from their 2022 peaks, funding to studios collapsed 93% by 2025, and gaming's share of Web3 venture capital slid from 62.5% in 2022 to single digits. More than 300 blockchain games shut down. Axie Infinity, the flagship of the whole model, went from roughly 2.7 million daily players at its peak to a few thousand. DappRadar's Q2 2025 data confirms the same picture of decline.

The takeaway is not "blockchain in games is dead," but something narrower: an economy where the player shows up to earn turned out to be fragile. The legal infrastructure around digital ownership, by contrast, grew stronger over the same period — and it is that infrastructure that determines what can be built next. So the rest of this article is about the mechanics, not the hype: how the internet evolved, what Web3 actually is, and how the leading jurisdictions answer the question of who owns virtual assets.

Understanding the Evolution of the Internet: From Web1 to Web3

When people hear about Web3, they often wonder what it means and how it relates to previous iterations of the internet. To understand this evolution, let's look at how the internet and gaming landscapes changed through different eras.

The Read-Only Era (Web1: 1991–2004)

The internet's first generation was fundamentally passive, offering users a one-way experience of consuming content. Website owners kept complete control over their platforms, hosting content centrally with no way for users to interact with it. Platforms like MSN, Yahoo!, and early Google exemplified this approach. Gaming during this era introduced the first multiplayer experiences, with titles like Ultima Online and Quake pioneering online play despite technical limitations.

The Interactive Era (Web2: 2004–Present)

Web2 turned the internet into a participatory space, letting users both consume and create content. This shift gave rise to Facebook, LinkedIn, and YouTube, which changed how people interact online. It also brought serious privacy concerns, with data monetized through targeted advertising. In gaming, Web2 delivered unprecedented connectivity and sophisticated gameplay, as seen in League of Legends and Minecraft, though publishers kept strict control over virtual assets and player data.

The Transitional Phase (Web2.5)

Web2.5 is a bridge between the traditional internet and blockchain, and it is especially visible in gaming. These platforms keep familiar interfaces while adding blockchain elements like NFTs, mainly for transactions. Illuvium and Deadrop show the approach: limited asset ownership and community involvement, while core game data stays off-chain. This era enhances the gaming experience through VR, AR and AI, and gradually introduces the ideas of digital ownership and cross-game asset portability.

The Next Internet Revolution: Understanding Web3

Web3 represents a fundamental shift in how digital interaction works, built on the principle of "create, engage, and truly own." This technological paradigm brings several elements that reshape the digital environment.

At the forefront of Web3 stands digital autonomy, powered by blockchain and enhanced by artificial intelligence, virtual reality and the Internet of Things. Unlike centralized systems, Web3 removes single points of control and distributes governance across networks of users.

This model gives people control over their own digital presence. Through cryptography, a user gains genuine ownership of their content, personal data and virtual property. Digital asset rights become portable: ownership is preserved regardless of a change of platform.

Web3 breaks down traditional gaming barriers and lets different virtual worlds interact. Economic models are built around player-owned assets, giving rise to genuine virtual economies. Corporate structure is changing too, with traditional models giving way to decentralized autonomous organizations (DAOs).

Leading this shift are platforms like Ethereum and projects across the crypto industry. And although mass "play-to-earn" did not live up to its promise, the digital-ownership infrastructure itself has remained and continues to be built into gaming products — now without the promises of quick money.

The Legal Framework Challenge in Web3 Gaming

The emergence of Web2.5 and Web3 businesses created a hard problem: how to build standard legal structures when countries take different paths. Japan's experience is especially instructive as an example of how recommendations gradually become law.

Japan positioned itself at the forefront of Web3 early on, with clear government backing at the WebX 2023 summit, where Prime Minister Fumio Kishida described Web3 technologies as one of the pillars of the country's economic renewal. A significant step came in April 2023, when the Liberal Democratic Party's specialized Web3 task force unveiled a package of policy recommendations. Its "white paper" set out proposals across four key areas:

1. Regulatory framework for digital currencies. Clear rules for issuing and circulating stablecoins.

1. Organizational innovation. Streamlined legal procedures for DAOs.

1. Tax reform. More accommodating cryptocurrency taxation.

1. Market infrastructure. A structured licensing system for financial intermediaries.

By 2026 these proposals had stopped being drafts. Japan's Diet passed an amendment that reclassifies crypto as a financial instrument under the Financial Instruments and Exchange Act (FIEA) — moving it out of a "payments" regime and into an investment one, effective 2027. Alongside it came a tax reform: the top rate on crypto income drops from as high as 55% to a flat 20% starting in 2028. For projects, this changes both the tax math and the very status of tokens in the regulator's eyes.

Japan's corporate giants showed strong engagement with Web3 well before these reforms. Examples include Sony's collaboration with Startale Labs, Bandai Namco's Web3 investment fund, and Square Enix's investment in the Ethereum-based gaming platform The Sandbox. Behind these moves is a broader trend: Japanese Web2.5/3 ventures aim to keep their core business inside the country, leaning on a friendly regulatory environment.

The country offers a range of organizational forms for different business models, from traditional companies to DAOs. Several notable DAOs have emerged in the Japanese market, each with its own purpose. The pioneering CryptoNinja community operates through Ninja DAO — one of the country's largest decentralized organizations, which lets members develop its NFT ecosystem. Wagumi DAO works to expand Web3's presence across Japanese society, while SUPER SAPIENS has found a niche in entertainment: token holders directly influence creative projects through voting. The Financial Services Agency's proposed framework for "Limited Company Type DAO Member Rights Tokens" further streamlines such structures — particularly around employee rights and governance.

Taken together, Japan has secured a role as a promising hub for Web3 companies, combining regulatory clarity, technological infrastructure and business-friendly policy.

Digital Gaming Business Models in the UAE

In the UAE, Web2.5/3 game developers usually set up formal corporate structures rather than operating informally. This protects intellectual property rights and reduces regulatory exposure. The country offers a wide range of licences for the gaming sector and Web3 services, including specialized categories such as offshore gaming operations.

A distinctive pattern has emerged in how these companies handle virtual assets. Rather than running these operations in-house, companies often delegate virtual asset management, including NFT operations, to external partners. The reason is the UAE's strict licensing requirements for virtual asset services: significant investment, administrative complexity and long approval timelines.

Over the past two years, Dubai's virtual assets regulator, VARA, has brought those requirements into a finished, supervised regime. In March 2025, VARA finalized its Custody Services Rulebook — with client-asset segregation, cold-storage minimums and mandatory audits. In April 2026 it issued dedicated Virtual Asset Issuance Guidance covering fiat-referenced and asset-referenced tokens. The point of the shift is that the regulator moved from simply issuing licences to active supervision: the rules are not only on paper — they are enforced.

Against this backdrop, UAE gaming companies typically pursue one of two strategies:

1. Working with licensed international providers.

1. Setting up subsidiaries in jurisdictions with more streamlined virtual asset regulation.

These arrangements are usually formalized through user agreements that explicitly separate the UAE company's gaming operations from virtual asset management. This limits the scope of liability. As a result, the business keeps a prestigious UAE presence while running virtual asset operations through more convenient jurisdictions. Importantly, as VARA's supervision has tightened, the choice of where virtual-asset operations sit and who holds the licence has stopped being a technicality — it is a decision with real consequences.

Hong Kong

Hong Kong's situation is more complex than the UAE's. Some developers set up companies; others appear to operate without formal entities. Developers with registered companies often stress that they do not provide financial services and only facilitate administrative functions through their platforms. Interactions happen directly between users as buyers and sellers, or between users and external platforms. Developers try not to take on responsibility for virtual asset transactions.

That caution has become even more justified as regulation tightened. Hong Kong's Stablecoins Ordinance came into force on August 1, 2025, making the issuance of fiat-referenced stablecoins a licensed activity under the Hong Kong Monetary Authority (HKMA): with minimum paid-up capital of HKD 25 million and full reserve backing by high-quality liquid assets. Hong Kong runs a dual-track system: the Securities and Futures Commission (SFC) licenses virtual-asset trading platforms, while the HKMA licenses stablecoin issuers. For a gaming project, this means any move toward its own currency-pegged token falls under a licence.

Offshore

When launching Web2.5 or Web3 projects in offshore jurisdictions, companies usually choose regions with supportive regulation, attractive tax terms and business-friendly policy. Importantly, in the virtual asset space "offshore" does not mean unregulated. Many leading offshore jurisdictions have already adopted rules for virtual assets.

Structurally, Web2.5 and Web3 projects often set up several legal entities with distributed roles, or outsource tasks such as KYC checks to external providers. Different offshore regions also offer flexible structuring options. For example, Foundation Companies in the Cayman Islands offer advantages tailored specifically to Web3 projects.

With these details understood, a company can plan in advance where and how to structure a Web2.5 or Web3 venture to get the most out of an offshore jurisdiction.

Digital Asset Ownership

Who owns virtual assets is a very important question. Note that owning digital assets and owning intellectual property are two different things. A player holding virtual assets is not thereby a rightholder. The answer to the ownership question tells us which era we are closer to — Web2 or Web3. Below we share our observations across the key jurisdictions.

Japan

Ownership of virtual assets in Japan is, in practice, determined primarily by the terms of use of the platform or project — a legally binding agreement that sets out the rights and obligations of the user and the platform. That said, whether crypto assets qualify as an independent object of property rights is not settled in Japanese law: under Article 85 of the Civil Code the object of proprietary rights is a tangible thing, and the Tokyo District Court in the Mt. Gox case (2015) declined to treat bitcoin as a thing capable of ownership in the classical sense. Contractual mechanisms therefore come to the fore: it is the terms of use, rather than classical property law, that make rights to virtual assets certain and enforceable.

UAE

In the UAE, virtual assets are, in practice, treated as a transferable asset, and rights to them can be transferred — though the precise regulatory classification depends on the applicable VARA regime. The main difficulty lies elsewhere: the game rightholder's rules often do not cover virtual asset ownership, because third-party partners or group companies are heavily involved. So each time, the player has to study the rules of the specific third party that helps carry out actions with virtual assets and see how it treats the question.

Hong Kong

In Hong Kong, virtual assets are property, and in disputes the courts look first at how the rights to them are reflected in the terms of use. A court may even compare different versions of that document over time and how the ownership provisions changed. There are several possibilities for who ultimately owns the virtual assets. In Hong Kong there are games where the player gets a licence rather than full ownership. There are also companies that name the user as the asset's owner but take a fairly broad licence to use it. Even then, the player's ownership of virtual assets is not absolute: nothing, for example, prevents the terms of use from being amended so that the digital asset's owner changes. And there are games where the ownership rules are poorly developed, creating a gray area where the user acts at their own risk.

Offshore

The choice of a specific offshore jurisdiction depends on the specifics of your business model. As examples, we can look at the Cayman Islands, the British Virgin Islands (BVI), Seychelles and Malta and how offshore jurisdictions approach virtual assets.

In all of these jurisdictions, virtual assets are generally treated as property — though the precise classification depends on the jurisdiction — and ownership is governed primarily by the terms of use set by platforms or projects. These agreements are legally binding and must comply with local law to protect users' rights. The regulatory frameworks there require terms of use to be clear and enforceable, providing legal certainty over the ownership of virtual assets.

What This Means for a Studio Structuring Today

Put it together, and both sides of the equation have changed over the past year and a half. The market cooled: "play-to-earn" is no longer a reliable driver, and a project can no longer be built on the assumption that players will arrive for the tokens. The law, by contrast, hardened: what were drafts and recommendations in 2025 became enacted statutes in Japan, the UAE and Hong Kong in 2026.

The practical map has been redrawn as a result. "Offshore or outsource the token side and keep the game in the UAE" was a reasonable default in 2025. Today the licensed perimeter is wider and the supervision is real, so where virtual-asset operations sit and who holds the licence becomes a decision to make deliberately and early, without deferring it. A separate question faces those already registered under the old rules: it is worth reviewing their structure against the new regimes as a planned task, well ahead of any request from a regulator.

At Futura, we help teams walk exactly this path: choosing a jurisdiction for a specific game model, building the corporate structure, and separating gaming operations from virtual asset work so the design withstands both supervision and growth. The journey is still an exciting one — it just now calls for more sober decisions than it did at the peak of the boom. And we're here to help navigate it with you.