Blocking Crypto Games, Releasing Tokens: A Regulatory Blind Spot

**# Web3 Gaming Faces Hurdles Amid Regulatory Challenges and Structural Barriers** The evolving discussion surrounding digital assets, including cryptocurrencies, remains dynamic and continues to dominate regulatory conversations. Within this landscape, Web3 gaming—a promising blend of blockchain and gaming—remains in its nascent stages. Coupled with a broader slowdown in the gaming industry, Web3 game projects are dwindling, holding a minor share within the Web3 sector. **# Native vs. Legacy: The Divergent Approaches in Web3 Gaming** Web3 gaming's stunted growth is largely due to structural challenges, with development approaches split into "native" and "legacy" models. The native model incorporates blockchain technology from the game's inception, typically utilized by indie developers and smaller Web3 startups. These games integrate on-chain elements like tokenomics, non-fungible tokens (NFTs), and airdrops into their core design. However, the high costs associated with game development create a significant entry barrier. Conversely, the legacy approach adds blockchain functionalities to existing games with established intellectual property (IP). This method benefits from pre-existing user bases but often results in conflicts of interest. Game developers focus on maximizing in-app revenue, while token foundations aim to boost on-chain metrics. **# MapleStoryN: Nexon’s Foray into Blockchain Gaming** Despite these challenges, industry leaders see the potential transformative power of integrating blockchain with gaming. Web3 games offer a decentralized structure, enabling users to actively participate and contribute to the ecosystem. Players can trade in-game items and assets with minimal fees, enjoy verifiable ownership, and benefit from transparent, user-centric profit-sharing models. In this context, Nexon is set to launch "MapleStoryN," a blockchain-based gaming project, on November 15 as part of the "MapleStory Universe" initiative. With MapleStory being a globally renowned IP with over 180 million users, Nexon has a strategic opportunity in Web3 gaming. Nexon's subsidiary, NEXPACE, will independently oversee the development and operations, alleviating potential conflicts between game developers and token foundations. The MapleStory Universe aims to address criticisms of traditional play-to-earn (P2E) models, which often compromised gameplay quality for profit. By excluding pre-sales and external trading incentives, MapleStoryN ensures that all items and NFTs are earned solely through in-game activities. Nexon has also decided against conducting any NFT presales. “Our long-term goal is to create a structure wherein MapleStory survives even if Nexon ceases to exist,” the company stated. **# Regulatory Hurdles for Web3 Gaming in South Korea** Nonetheless, regulatory challenges in South Korea pose significant obstacles to the domestic growth of Web3 gaming. Digital asset-based games are equated with P2E models, which are not classified due to fears of gambling-like features. Regulators argue that the ability to exchange in-game items and tokens for fiat currency is the main reason for their prohibition. This regulatory landscape has stymied significant projects in the past. For instance, South Korean game giant Netmarble's blockchain-based game leveraging its popular IP “Everybody’s Marble” and Wemade’s NFT-integrated “Mir4” both failed to secure domestic approval. Similarly, MapleStoryN will not be available for South Korean players. Under current legal frameworks, Bitcoin and in-game items are deemed “assets of economic value” under criminal law. While the Virtual Asset User Protection Act recognizes them as tradable, the Game Industry Act prohibits them due to anti-gambling measures. Moreover, many Web3 games allow users to convert in-game items into NFTs. Although NFTs are not classified as “digital assets” under the Virtual Asset User Protection Act, they may fall under this category if traded on external exchanges. This ambiguity leaves Web3 gaming in a precarious regulatory grey zone. Jung-Hoon Lee, a professor of law at Chung-Ang University, commented, “If NFT-based items are not classified as virtual assets, they should be regulated under the Game Industry Act. If considered virtual assets, they would fall under the Virtual Asset User Protection Act.” He further noted, “Applying the Game Industry Act across the board because it involves gaming is not ideal. Institutional reforms, like introducing exceptions to existing regulations, are necessary.” **# Domestic Ban vs. Global Circulation of Game Tokens** Adding to the regulatory contradictions, in-game currencies from Web3 games are traded on domestic crypto exchanges despite the ban on these games being served locally. Examples include Wemade’s WEMIX token and NEXPACE’s NXPC token for MapleStory Universe. Experts emphasize the gaming industry's potential for blockchain integration amid the rise of digital asset transactions. Professor Lee concluded, “At a time when discussions on digital assets are accelerating, undue fears over the technology should not lead to the premature constriction of this growing market.”