The American Journal of Political Science Law and Criminology
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TYPE
Original Research
PAGE NO.
29-33
10.37547/tajpslc/Volume07Issue07-06
OPEN ACCESS
SUBMITED
18 May 2025
ACCEPTED
14 June 2025
PUBLISHED
16 July 2025
VOLUME
Vol.07 Issue07 2025
CITATION
Yakubov Akhtam Nusratullaevich. (2025). Virtual property in the digital
age: legal nature and regulatory approaches. The American Journal of
Political Science Law and Criminology, 7(07), 29
–
33.
https://doi.org/10.37547/tajpslc/Volume07Issue07-06
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
Virtual property in the
digital age: legal nature and
regulatory approaches
Yakubov Akhtam Nusratullaevich
Vice-Rector of Tashkent State University of Law, Doctor of Legal Sciences,
Associate Professor, Uzbekistan
Abstract:
What should be the legal mechanisms for the
protection of user rights in relation to virtual property,
there is no uniform approach to the question of which
direction countries should take. Currently, there is no
uniform approach to the protection of the user's rights
to virtual game property in world jurisprudence. In
vertical relations, that is, when considering disputes
arising from the relationship between the developer
and the user, the courts in most cases prefer to apply
the theory of natural obligations and the theory of
service provision. In many countries, the transaction of
virtual property is not legally regulated. The transfer of
virtual game property is considered the transfer of
rights of claim to the virtual property by the developer
of the game to the participant. The author analyzed the
legal description of virtual property, which is considered
one of the objects of the digital world, based on national
and foreign experience, and analyzed the need to find
them as a separate independent object in civil
legislation.
Keywords:
Virtual
property,
digital
objects,
cryptocurrency, blockchain technology, digitalization,
information technology.
Introduction:
At the current stage of social
development, along with the introduction of new
technologies in all spheres of life, there is a need to solve
the legal problems that arise in connection with them.
In the process of digitalization of the economy, it is
possible to encounter objects of civil legal relations of
property that has economic value but is not sufficiently
regulated legally.
Views that virtual property can be regarded as an object
of trade relations in the market due to its economic
value, and that the foundations for commercialization of
virtual property take different forms depending on the
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type of particular object, are growing stronger year by
year. If the formation of demand for domain names is
related to the uniqueness and irreplaceability of the
object (the impossibility of having two sites with one
domain), then the value of virtual property in games is
considered
significant
because
users-game
participants spend real money to purchase it, that is, it
is formed by purchasing it in exchange for real money
[9; 45-59].
Virtual world events lead to real consequences even
for persons who do not participate as participants
–
players or users. Examples of this can be found in
issues related to property hidden by individuals in the
virtual world when dividing common property with
spouses, distributing inheritance, or including property
in the share mass in bankruptcy. There is no need to go
far in this regard, a number of cases considered in
arbitration courts of CIS countries confirm this opinion
[8].
The lack of legal regulation of virtual property
circulation results in the inability of persons who are
not game participants to adequately protect their
rights in mutual relations with the creators and
developers of these games, and the absence of legal
guarantees for this leads to violations of the principle
of fairness in protecting property rights.
The question of which form of governance is
preferable in this area is also one of the open issues
today. State governance and self-regulation forms of
virtual space differ from each other according to the
characteristics of governance and the degree of legal
regulation.
Until recently, the virtual game world and the virtual
world space encompassing the Internet appeared as a
system free from the state's coercive function and
aimed at complete self-regulation. In practice, similar
to «lex mercatoria,» a set of Internet self-governance
rules «lex informatica» has been formed, and it is no
secret that its normative force is ensured by technical
means [7; 93
–
107]. At the same time, some states or
companies began to use the Internet and its
capabilities contrary to Jon Barlow's ideas, without
adhering to the golden rule «treat others as you would
like to be treated» [1; 7].
It is no secret that the following thoughts expressed by
E.A. Voinikanis have become reality in recent years:
«Lex informatica» embodies the interests of a small
circle of people or «digital elite» and it lacks the
necessary transparency and began to show
characteristics of «democratic deficit» as a result of
unilaterally imposing excessive obligations on other
users [6; 9]. With these thoughts, this scientist showed
that there is definitely a need for state intervention in
regulating virtual space.
Electronic commerce, intellectual property, protection
of honor, dignity and business reputation have emerged
as the main relations requiring civil-legal regulation in
the Internet network. The world of virtual games has
remained outside the field of legal regulation, and the
main arguments for this are, first of all, the prevailing
assessment that virtual games are entertainment events
–
a process of spending leisure time consisting of games
and fun [9; 45-59].
In scientific research and arbitration practice, the need
for legal regulation of the virtual world by the state is
determined by three main approaches. Representatives
of the first approach, which denies the influence of law
on the virtual world, believe that all property issues
related to virtual games should be entirely within the
discretion of IT engineers who are the creators of these
games.
The second approach is expressed through B.
Duranske's «magic circle» rule. According to this
approach, it is proposed that law supporters should
resort to real-world legal norms to regulate these
processes only when events in the virtual world produce
legal consequences for the real world [2; 55-56].
Based on this rule, the idea emerges that relations in the
virtual world today need to be fully legally regulated.
The reason for this is that the impact of relations in the
virtual world on the real world can always be
encountered. For example, property usually used in the
virtual world, namely games, represents monetary
value and can be included in civil circulation, particularly
sold, in digital markets such as e-Bay or Avito. In this
case, virtual property can be purchased for money or
created as a result of the player-participant's labor in
compliance with game rules.
Representatives of the third approach believe that the
virtual world should be within the scope of legal
protection. In their opinion, state intervention in these
relations is necessary due to the need to protect users'
interests. State regulation of this area is of great
importance from the point of view of protecting the
weak party (the user) in relations with game creators in
the sphere of relations within virtual games involving
multiple players and collecting taxes from income
obtained as a result of virtual property operations.
Because the Internet community is dissatisfied with the
means used by the state to solve problems arising from
the application of the «lex informatica» principle, in
recent years special attention has been paid to
developing other mechanisms for protecting users on
the Internet, including blockchain technology.
«Lex cryptographica» stands out as a set of self-
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governance rules of the blockchain community by
reflecting democratic principles. As M.V. Majorina
notes, «This new technology is considered
advantageous due to its independence from the state,
transparency, and making final decisions based on
mutual agreement of users» [7; 93 - 107].
The application of such new technologies in the virtual
gaming industry serves to eliminate existing legal gaps
in more fully protecting the interests of virtual world
participants
–
users. Cryptographic encryption
provides the ability to protect users' virtual property in
games from attacks, particularly from virtual theft.
The existence of the right to «own» game attributes
means their independence from the game creator. The
reason for this is that the virtual property of a virtual
game participant appears as a token in the user's
crypto wallet, and the user can use this property
outside the scope of this game. Virtual game property
circulation is carried out through smart contracts,
which leads to their automatic execution and does not
require
any
additional
guarantees
between
contracting parties. These mentioned advantages are
characteristic only of new decentralized blockchain
games, and today it is impossible to apply these rules
to traditional virtual games that stand out for their
graphics level, plot depth, and most importantly, the
large number of participants [9; 45-59]. In this regard,
problems related to property issues in traditional
games and the search for their legal solutions remain
relevant.
It should be noted that there is no unified concept
regarding the legal nature of virtual property and
property rights related to it.
There is no definition of the term «virtual property» in
legislation. In addition, the concepts of «digital rights
(digital assets),» «digital object,» «virtual property»
and «virtual game property» should be distinguished
from each other.
Digital rights, reflected as a new object of civil rights in
modern doctrine of civil law, are assessed as identical
concepts with utility tokens that give their owner the
right to demand anything, absolute rights to
intellectual activity results related to performing work
or providing services, or their licenses.
We believe that digital rights should be included by the
legislator in property rights, namely in the «other
property» category of the Civil Code, in the system of
civil rights objects. We have conducted analyses on this
within other paragraphs.
We propose to introduce the following definition into
civil legislation: «Digital rights are a set of rights whose
content and implementation conditions correspond to
criteria established by an information system in
accordance with legal documents.»
Understanding the concept of digital object is also of
great importance. In our opinion, virtual property
should be included in the category of «digital objects»
that is, objects presented in digital form. Any virtual
property is considered a digital object, but not every
digital object can be virtual property. The reason for this
is the existence of specific features that distinguish
virtual property from other digital objects.
As M.A. Rozhkova emphasizes, virtual property can exist
only in digital form, but traditional results of intellectual
activity can exist in digital and other forms, including on
paper. Traditional results of intellectual activity
expressed in digital form are protected by civil
legislation as intellectual property objects [10; 21].
Virtual
property
includes
utility
tokens,
cryptocurrencies, domain names, stickers, social
network accounts, and property in virtual games as
material values [10; 21]. Some authors also include
email addresses and virtual accounts in virtual property
[3; 1055-1058].
Currently, legal norms regarding digital rights are
specified to apply only to tokens in some states,
including values representing virtual game property in
decentralized blockchain games. There is no clear set of
rules in either national or foreign legislation regarding
other mentioned objects.
There are also various views and approaches regarding
understanding virtual property and its characteristics.
As M.A. Rozhkova notes, virtual property includes
«intangible objects that have economic value but are
useful or can only be used in virtual space» [10; 22].
In multiplayer virtual games, game property has
characteristics and special features inherent to any
virtual property. The following can be indicated as
general features characteristic of any virtual property:
First
, virtual property has an intangible character.
Virtual property, unlike things, does not have the
characteristics of depreciation and consumption.
Second
, unlike traditional intellectual property objects,
virtual property appears only in digital form and
technically represents code.
Third
, based on the characteristics of applied
technologies, the possibility of copying virtual property
is limited. Copying a film work leads to the emergence
of two material means having two identical film works.
However, there is no possibility of copying virtual
property; it appears in a single form and copy as code.
Nevertheless, representatives of Anglo-American
doctrine emphasize the similarity of virtual property
with real things [3; 1055-1058].
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For example, when transferring a game object in
virtual games, it is not copied but transferred to
another user's inventory. When transferring login and
password, the account remains in its state, only both
users have the right to access it until one of them
changes the password. At the same time, it is difficult
to call these conditions perfect, because in practice
there can be a game scenario according to which when
transferring a game attribute, it does not disappear
from the user's gaming equipment but is copied to the
second person's arsenal.
Fourth
, the boundary of the user's ownership right to
virtual property resembles «quasi-ownership» in civil
law. The reason for this is as follows. Logins and
passwords of user accounts in games and social
networks, public and private keys in crypto wallets, site
administrator and domain name owner's login and
password create the possibility of controlled access to
virtual property [3; 1055-1058]. The sole owner of this
information retains absolute right to the virtual object
belonging to the virtual game participant. Of course, it
would be wrong to say that these conditions apply to
all modern virtual games.
Fifth
, game developers, domain name registrars, and
social network administrators have technical
capabilities to determine the fate of users' virtual
property. P. Palka calls the capabilities of these
subjects «digital force» because the use of accounts
and game attributes is carried out only when the
developer ensures the operation of the server
(platform) [4; 49-53]. Despite the absence of a central
subject in blockchain technology, this technology can
be subject to «50 + 1» attacks. Although this situation
differs from managing a central server, it means the
existence of secondary control over user power.
Based on the above, the following can be concluded:
First
, virtual property is an intangible object in digital
form, which is part of the game, and the player uses it
only when they have access to the account for which
the mentioned object is designated. The user's control
over their account resembles ownership rights
because the existence of a password gives the user the
ability to make decisions about allowing third parties
to access their account and independently make
decisions about transferring game attributes available
in the account.
Second
, all types of virtual property have common
characteristics: intangible character, existence within
virtual space, economic value, and control of access to
accounts (websites, personal rooms).
There are two main problems that prevent virtual
game property from being subject to a unified regime
of virtual property: protection of game developers as
copyright objects and issues of applying obligation rules
to multiplayer games.
Third
, protection of users' rights in virtual space is based
on one of the following theories: property rights theory,
service provision theory, intellectual rights theory, and
obligations theory.
Fourth
, the use of blockchain technology in the virtual
gaming industry serves to solve the problem of legality
of virtual game property circulation and gives users the
ability to use and dispose of virtual game property
presented as tokens in their crypto wallets.
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