The Future of Religion in the Metaverse

Tech companies are investing in the Metaverse and recognizing the importance of religious communities. Some have already been regularly meeting in the Metaverse and conducted religious rituals like baptism. The Metaverse would play a key role for religious communities soon. Many questions remain, though, as to whether that relationship will be beneficial for the religious communities and their members or merely help the Metaverse platform companies prioritize for profits in the name of religious faith at any cost.

Religious communities have long been key players in gathering people in congregation throughout history. Hence, it is not a surprise that religious communities have been actively exploring the true potential of the Metaverse during the pandemic. As the Zoom meeting has become the new norm regardless of age, gender, background, and the level of digital literacy, the road to the Metaverse has been paved with a mix of hype and hope. At the same time, the questions of who owns and governs the infrastructure necessary for meeting and growing faith-based communities in the Metaverse raise concerns. 

The Metaverse is the future of the new communication channel and media that can be compared to the invention of the printing press of Gutenberg. Gutenberg’s printing press accidentally collided with the protestant reformation led by Martin Luther and John Calvin, that shaped the modern world. The Internet has already vastly changed the way we interact with our family, friends, and colleagues. Everyone will be connected to everyone else in a much simpler, more humane, accessible, and interactive way as the Metaverse emerges. We can do part of our personal relationships in the Metaverse beyond a physical barrier. 

The anonymity in the Metaverse can help people feel more confident about themselves, motivating them to share deeply personal issues with others. The Metaverse puts everyone behind the avatar. In fact, that helps people in the Metaverse to be more true to themselves. Now, VRChat, for example, has more than 25,000 virtual reality communities that include worship and counseling services for a bunch of teens and 20-something. The Metaverse can allow members to freely meet without judgment regardless of their physical ability or appearance. For people with social phobia, it is much easier for them to be more actively engaged with others in the Metaverse than in a public place of worship. 

Ranging from spiritual meditations in fantasy worlds to traditional worship services in virtual liturgy in hyper-realistic and church-alike environments, religious communities can experience a fellowship that is just as genuine as what they used to have at an old brick-and-mortar temple. It is yet quite controversial, though, if religious activities like baptism to the avatar surrounded by their relatives and friends in the Metaverse shall be respected as the expression of orthodox religious beliefs and practices in the real life.

My key assumption is that robust religious life will certainly continue to grow within the Metaverse. People would first see what the religious communities are trying to do in the Metaverse. Later, people will witness how the Metaverse is completely reforming the landscape of the religious communities and their regular gatherings for worship. Therefore, we need to tackle many important questions and create dialogues among key stakeholders of the Metaverse and religious communities if new religious modalities could emerge in the Metaverse and if the Metaverse reduces or increases religious and social conflicts that we have never seen before. 

We need to deep dive into rather controversial subjects at the juncture of technology, religion, and sociology. We must start dialogues on specific matters such as the civic necessity of religions in the Metaverse to build a just world at peace. It shall be done with respect to the rule of law and the need of reorienting digital platform’s moderation approach to center the protection of not only major religions, but also marginalized religious communities in the Metaverse.

Leading tech companies like Meta (formerly Facebook) are interested in creating partnerships with leading faith communities to make sure that future communal innovations are taking place on their own platforms and continue to invest in them. Pandemic has also increased the popularity of the Metaverse churches like the Robloxian Christians on the Roblox. However, what that means for faith communities themselves still remains to be seen. Therefore, for those who self-identify as religious and care about the future of religion, they have a lot of work to do. 

The Metaverse may influence dramatic changes in our social and religious norms. That said, we should lean in and claim our role in shaping the spiritual worlds within the Metaverse that is being created. As we enter into the Metaverse, we should not also forget about the mental and spiritual harm that people have already experienced in their real life as harassment based on their religious identity, race, gender, or sexual orientation. We shall safeguard people in the Metaverse from the menace of bigotry coming from other humans of difference as everyone should stand at equal footing in the Metaverse. 

The Metaverse may redefine what humans and humanity will be. The Metaverse would be constructive around faith and spirituality for a diverse set of religious communities in terms of creating a quasi-physical sense of connectedness for widely dispersed people. We can also create the Metaverse that allows religious communities to gather together in unprecedented ways of learning and growing in wonderous spiritual experiences. 

I envision seeing more leading religious institutions which start training and nurturing future leaders in the Metaverse.  They shall not only investigate how faith communities leverage the Metaverse to gather people, but also publish work on how to develop faith relationships on the Metaverse with the specific concerns of the moral and political rules and freedom of religious expression.New religions may emerge. At least, the transformation of old ones in the face of the Metaverse is imminent in search of true being and virtual immortality. Regardless of spiritual and ethical tradition, the Metaverse should create a safe new space of liberation and peace for an expanding circle of people with different beliefs, seeking to know one another and recognizing differences under their common values.


There is No Place to Hide: Would NFT be Taxable?

NFT stands for non-fungible token. It’s a fancy term for a unique digital asset that is associated with blockchain technology. Regardless of recent ups and downs of cryptocurrencies, businesses relating to NFTs have rapidly expanded. It encompasses both tangible and intangible assets such as music, fine arts, sports, hard jewelry, virtual goods, and so forth. NFTs will likely continue their double digit growth in the coming years despite recent troubles with cryptocurrencies. 

Korea has once taken up almost 30% of global cryptocurrencies and NFTs trades. Perhaps, zero tax on digital assets has propelled the adoption of NFTs. Due to its popularity, National Tax Services (“NTS”) has announced that NFTs would be taxed in the coming years. However, there are yet no clear rules, regulations, and even taxable legal definitions of NFTs or broadly digital assets although the legislators have been working on it. 

NFTs have come into prominence at the global scale as a way for creators to get fair compensation for their creative endeavors. It is also helpful for collectors to access a new type of investment worthy assets with ease. Each NFT comes with a unique ID that will be instrumental for a verifiable transaction history. This information should be traceable and secure as it is stored in the blockchain.  

Selling an NFT with cryptocurrencies, fiat money, other NFTs, or any goods or services is considered a taxable event. Creators who use NFTs to digitize their original work would be interested in monetizing their work by selling the equivalent of their original work. The creators still maintain original authorship to the work, and they may produce and sell other copies. However, the unique digital code assigned to each NFT acts like a proof of ownership. Hence, when an NFT is sold, it is a taxable event. The buyer may also have to pay taxes. 

NFTs are taxable. It should be taxed like other assets. But, the process is not going to be that simple. Until further guidance is announced to NFT transactions, taxpayers must apply existing principles of current tax law to NFT transactions. For example, the Internal Revenue Service (“IRS”) in the United States has increasingly issued specific guidance on the tax treatment of cryptocurrencies in recent years. The IRS has also included NFTs in discussions of broader digital assets. 

Despite the strong interest in NFTs, there is no specific legislative guidance currently available in Korea regarding whether NFTs are taxable or not. If so, what is the fair tax rate and tax base of NFTs for tax purposes? In order to delve into and discuss NFT-related tax issues, the first step would be to establish a sound legal definition of NFTs.
In sum, NFT transactions may be viewed as a transfer of a virtual asset or an investment worthy contract, which is one of the securities, or simply a right to the underlying asset such as  copyright or neighboring rights to copyright. In 2022, the IRS released a draft stating that NFTs would be considered digital assets, similar to cryptocurrencies. If NFTs are sold for profit, it would be considered as Capital Gain or Collectible in the tax definition. There is an additional tax aspect that also needs to be considered for sellers of NFTs that have seen the rise in value in recent years. Works of art in real life, for example, are considered collectibles and are taxable at the higher rate at 28%.

One thing to remember, though, NFTs differ from cryptocurrencies. Hence, taxpayers should not treat NFTs in the same manner as we do with cryptocurrencies. Unlike major cryptocurrencies such as Ethereum, which are fungible, NFTs are not interchangeable with each other. In theory, they cannot be directly exchanged for other currencies, goods, or services. However, a growing number of NFTs are attached to real collectibles, not virtual ones. Oftentimes, they are actively changing hands. NFTs that are attached to hard jewelry or expensive cars, for example, are actively traded in respective vertical NFTs.

Many policymakers think that NFT holders owe taxes. Because cryptocurrencies are not the same as fiat currencies such as dollars. Buying with cryptocurrencies is more like selling a stock to get the money to buy an art piece. When an NFT is purchased with cryptocurrencies, the gain or loss on the cryptocurrencies that are used must be calculated for a tax purpose. They could be taxed as a short-term or long-term capital gain, though.

You will likely have to pay taxes upon the sale of NFTs in the near future. If you’re a creator, it would be taxed as ordinary income. As a subsequent owner of NFTs, they are taxed differently depending on the use case and the length of duration that you have held onto. It is not yet 100% clear if tax authorities classify NFTs as collectibles any time soon. Holders must pay taxes upon purchasing NFTs due to the disposal of their cryptocurrencies. When you purchase NFTs with cryptocurrencies, it will also trigger a taxable event as you will have to pay taxes on any capital gain from your cryptocurrencies trading. If NFTs are eventually classified as a collectible, which is also not impossible, it would be subject to the 28% capital gains rate in the case of the U.S. like other collectible assets such as stamps, artwork, and precious metals.

NFTs are a new type of asset. Current tax law is slow to adapt and does not have provisions specifically related to the tax treatment of NFTs. All tax treatments outlined in various forecasts are yet quite speculative based on existing tax law. If you are investing in NFTs, you must be sure to keep good records of your transactions and seek relevant support from tax professionals with domain expertise. Soon after tax authorities release additional guidance, the taxation of NFTs will become more clear and spread fast. No matter what the law says, proper documentation and evidence of your purchases and sales history would minimize potential tax risks in the near future.