The Sorare Legislation and Its Influence on KYC/AML Obligations
The emergence of digital objects and NFT-based monetization in the world of online gaming has led to the creation of the Sorare Law in France.
Oct 20, 2023
3 min read
The emergence of digital objects and NFT-based monetization in the world of online gaming has led to the creation of the Sorare Law in France. This legislation, named after the Web3 unicorn Sorare, is designed to provide a regulatory framework for games that involve digital objects and NFTs. In this article, we will delve into the context and details of the Sorare Law, emphasizing its impact on companies, especially in terms of KYC (Know Your Customer) and AML (Anti-Money Laundering) obligations.
Understanding the Sorare Law
The Sorare Law was introduced to address the question of whether games based on the monetization of digital objects, including fantasy sports with collectible cards, should be classified as games of chance, similar to sports betting. Sorare, a French startup, insisted that it was not involved in regulated gambling activities overseen by the ANJ (Autorité Nationale des Jeux). However, the government stepped in with a proposed law to create a tailored framework for digital objects, thus protecting the Sorare market in France.
The law, as it stands, grants a special authorization for games involving "monetizable digital objects" and "random mechanisms." Notably, it specifies that the gains in such games must exclusively involve digital objects, explicitly prohibiting their conversion into legal currency. The exact list of authorized games will be determined by decree, following the advice of the ANJ.
Impact of the Sorare Law
The Sorare Law introduces several key provisions that directly affect KYC/AML obligations for companies operating in the space of digital object monetization:
The law mandates the implementation of an age verification system to exclude minors from participating in these games. The specific mechanisms for age verification will be detailed in subsequent regulations.
Identity Verification for Winnings
Players will be required to undergo identity verification when they seek to withdraw their winnings. This measure is aimed at preventing money laundering and the financing of illegal organizations.
The law imposes limitations on the promotion of NFT-based games by influencers. Additionally, platforms such as YouTube are prohibited from promoting these games until they can effectively exclude minors from their platforms.
The ANJ will be responsible for monitoring and regulating these activities, ensuring compliance with the Sorare Law.
Unlike traditional gambling, games involving NFTs will not face the same high taxes, offering a favorable environment for companies like Sorare.
Synaps: Your KYC and AML Compliance Solution:
Synaps, a leading KYC and AML service provider, is well-equipped to assist companies in complying with the Sorare Law. We offer cutting-edge solutions that ensure compliance and provide instant user verification through the following methods:
Synaps leverages advanced artificial intelligence to streamline the KYC/AML process, making it efficient and accurate.
Our use of NFC (Near-Field Communication) technology enhances identity verification, offering a secure and convenient method for confirming user identities.
Synaps provides a reusable KYC framework, enabling companies to perform ongoing verification with ease, ensuring continued compliance.
The Sorare Law, designed to regulate games involving digital objects and NFTs, has far-reaching implications for companies operating in this space. Compliance with KYC/AML obligations is essential to navigate this regulatory landscape effectively. Synaps stands ready to assist companies in ensuring compliance through its state-of-the-art AI, NFC, and reusable KYC solutions, providing a secure and efficient path to meet the requirements of the Sorare Law. As this legislation unfolds over its experimental three-year period, companies must adapt and thrive within this evolving regulatory framework.