'The NFT dream of buying a unique sword in one game and using it in any other game is exactly that: a dream' So the question then becomes, why would Valve want to invest in blockchain technology despite the headaches we know it will create and the unknown additional headaches likely to come from governmental and regulatory intrusion? Why would any big platform holder? Why would it go to all the trouble of incorporating and supporting an economy of decentralized goods that it cannot control, enabling transactions that it cannot take a slice off the top of, disrupting an industry standard business model that suits Valve very well already? None of this technically precludes Steam from hosting blockchain and NFT-based games, but there are significant unanswered questions around the regulatory and legal implications here, enough to make the whole thing look like a headache waiting to happen. China has already banned mining of cryptocurrencies and halted digital currency transactions and the US Securities and Exchange Commission has promised increased regulation of cryptofinance. There's also the very real possibility of governmental regulation of various types of blockchain technology. Given the central conceit of NFTs, it will be very difficult for developers of these blockchain games to argue they have no real-world value. The games industry proper has been very clear about its virtual goods having no real world value - even though it will happily sell you as many in-app purchase bucketloads of gems as you want for $100 a pop - and even then it has found itself repeatedly under fire from critics and legislators. The law allows for anyone who loses a thing of value to an illegal gambling operation to sue to recover those loses, which is how that lawsuit led to an appeals court verdict against Big Fish and a pair of class-action settlements that cost the company $155 million. It apparently worked, as the little came of that inquiry.ĮA made the same argument in front of the Netherlands Gambling Authority in defense of FIFA Ultimate Team, but less successfully.Īnd a little closer to home for this discussion, Big Fish Games in 2018 argued that virtual items have no real-world value when it was sued over the social casino game Big Fish Casino in the state of Washington, which also happens to be where Valve resides. The ESA insisted virtual items have no real-world value when the Federal Trade Commission looked into loot boxes. 'The argument that virtual items don't have real-world value has been a key part of the industry's defense against accusations that loot boxes are gambling'īeyond taxation, the argument that virtual items don't have real-world value has been a key part of the industry's defense against accusations that loot boxes are gambling. A German tax court recently ruled that renting virtual buildings with virtual currency was subject to actual taxes. The US government started looking into taxation on the exchange of virtual goods in games like Second Life and World of Warcraft some 15 years ago. The idea of virtual items having 'real-world value' has been a contentious issue for years. 'Steam's point of view is that items have value and they don't allow items that can have real-world value on their platform,' Age of Rust developer SpacePirate Games said on its Twitter account last week as it spread news of the blockchain ban. Valve hasn't yet explained why it's banning NFT and blockchain games, but a developer of one such game has given us some indication. It was an unusually proactive move for a company that typically takes an 'anything goes' approach to what happens on the platform, and then reverses course only when people point out the entirely foreseeable problems or it gets yelled at loudly enough.Īs much as I would like to give Valve credit here for assessing the downsides of blockchain technology and refusing to contribute to an environmentally disastrous speculative bubble with no compelling use case in games - which is our stated reason for limiting coverage of blockchain start-ups - it doesn't seem like that has anything to do with Valve's reasoning. Last week, Valve updated the Steam rules to prohibit games based on blockchain that issue cryptocurrency or NFTs, or let users exchange them.

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