- The Metaworld Development project’s virtual land portfolio will be acquired from popular metaverse platforms The Sandbox and Decentraland
- To appeal to the mass market, Metaworld’s NFTs will be ‘priced very affordably to promote fractional investing’, according to a co-founder
A new non-fungible token (NFT) project started in Hong Kong is encouraging people to invest in shares of expensive virtual land created in the metaverse, as increased interest in these digital assets contrasts with recent warnings about their potential risks in a city where regulators remain slow to act.
The Metaworld Development project aims to sell 2,000 NFTs in the form of “keys” with different designs. Each NFT key represents a percentage ownership of the project’s total portfolio of virtual land, which the team will buy from popular metaverse platforms The Sandbox and Decentraland.
To appeal to the mass market, Metaworld’s NFTs will be “priced very affordably to promote fractional investing”, said one of the project’s co-founders, who asked to be identified by the pseudonym KeyKreator. It will be “an easy vehicle to invest in metaverse directly”, according to the project’s website.
The Metaworld team’s strategy for managing its virtual land portfolio include trading these digital properties, renting them to major brands and then distributing the capital gains back to holders of the NFTs, according to the project’s website.
NFTs, digital assets whose ownership and uniqueness are verified by blockchains, have become mainstream around the world, with people snapping up digital artworks and cartoon avatars for millions of dollars.
The metaverse – a concept that refers to an imagined immersive virtual world, where digital representations of people can interact with each other like they do in real life – has also taken off in the past year, propelling an investment frenzy. NFTs are expected to drive the metaverse economy.
Metaworld reflects the growing creativity in monetising NFTs and metaverse-related projects in Hong Kong, where recent initiatives mostly involved collections of cartoon avatars.
You could draw parallels between our objective to what you would define as a traditional security or fund, said another Metaworld co-founder, who asked to be identified as Merchitect. But we are not an investment fund or a security of any kind. We are an investment-focused NFT project.
While there is currently no known major property developer from Hong Kong or mainland China that has ventured into NFTs, Adrian Cheng Chi-kong, the third-generation scion of conglomerate New World Development, added virtual real estate to his growing investments in December. In his personal capacity, Cheng invested in The Sandbox, which offers virtual real estate called Land NFTs. Hong Kong developer Sun Hung Kai & Co. has invested in The Sandbox and bought virtual lands on the platform.
In the past 30 days, virtual land on The Sandbox sold at an average price of US$10,854, according to market tracker Nonfungible.com
Although NFTs are not inherently securities, the line could become blurry as the community promoting these digital tokens comes up with more creative business models, according to Charles To, a partner at law firm Ellalan in Hong Kong.
Under the city’s Securities and Futures Ordinance, “securities” have a very broad scope and would include any “interests in any collective investment scheme”, To said.
If an NFT represents fractional ownership of other assets, whether virtual or physical, there is a high chance that such NFTs would constitute a security, especially if the fractional NFT holder does not have day-to-day control over the management of the asset, he said.
Metaworld’s new project comes as risks involving NFTs and the metaverse have been singled out as major security threats to look out for in the city in 2022, according to the government-run cybersecurity watchdog Hong Kong Computer Emergency Response Team Coordination Centre.
The team behind Metaworld said that the project ensures transparency by having its cryptocurrency wallet address visible on the blockchain for people to track. Metaworld will also publish quarterly valuation statements on their virtual land portfolio.
The total size of virtual land that the project will manage depends on the amount of money they raise from the sale of NFTs, according to Metaworld’s co-founders, who declined to reveal their identities. While anonymity is common practice among cryptocurrency and NFT circles around the world, this is drawing more scrutiny, as investments in these digital assets become more mainstream.
Metaworld’s core team consists of “seasoned investment professionals”, with a combined experience of more than 15 years working across global leading financial institutions, according to the project’s white paper, which also covered its investment strategy and virtual land market data.