Web3 game collapse... The myth of 'digital asset ownership' has been shattered

Source: TokenPost Original Title: Web3 Gaming Collapse… The Myth of ‘Digital Asset Ownership’ Crumbled Original Link:

Was ‘Digital Ownership’ an Illusion… The Shadow of Web3 Gaming’s Downfall

The Web3 gaming industry experienced a massive collapse in 2025, revealing that the once-promised ‘digital asset ownership’ was fundamentally a fiction. The core issue was not merely the lack of technological capability or ambition from game companies, but regulatory legal barriers.

When the Game Ends, the Assets Disappear

Web3 games have claimed to issue NFTs and tokens via blockchain, allowing users to own them. However, in reality, the opposite has occurred. According to blockchain analysis platforms, 8% of active Web3 games closed their doors in the second quarter of 2025 alone. This is due to venture funding dropping by 93% compared to the previous year and market saturation.

During this process, major Web3 titles such as ‘Tatsumeeko,’ ‘Nyan Heroes,’ ‘Blast Royale,’ and ‘Rumble Kong League,’ linked to NBA star Stephen Curry, ceased services. Even the MMORPG ‘Ember Sword,’ which raised approximately $200 million (about 28.88 billion KRW), suddenly shut down, causing the value of related tokens and NFTs to evaporate overnight.

Notably, the virtual asset NYAN from ‘Nyan Heroes’ plummeted over 40% in a single day, and its market cap dropped 99% from its peak, exposing the fragile nature of digital asset ownership.

Web3 Games Facing Regulatory Barriers

When Web3 game platforms directly upload assets to the blockchain, issue NFTs, and freely trade tokens, they are no longer just games but are considered ‘financial services.’ This means they fall under the jurisdiction of global regulators such as the US Financial Crimes Enforcement Network (FinCEN) and the European Union’s Markets in Crypto-Assets (MiCA) regulation.

Magnus Soderberg, CEO of Trilloris Games, warned, “The level of regulatory compliance in the Web3 gaming market is currently very low,” and many developers are ignoring or unaware of legal requirements.

If subject to regulation, they must meet complex and costly requirements such as user identity verification (KYC), anti-money laundering (AML), asset custody, and transaction record reporting. Especially in Europe, obtaining licenses and securing remittance licenses in each US state can cost at least $10 million to $15 million (about 144.4 billion to 216.6 billion KRW).

Games Avoiding Regulations, Losing Trust in the Process

Small and medium-sized game studios with limited funds often abandon regulatory compliance, operate tokens only within the game, or rely on basic blockchain functions to launch their games. However, this approach raises issues such as unfair token flows like insider allocations or dumping, and fragmented economic systems.

Soderberg pointed out, “Avoiding regulation doesn’t save costs. Instead, it risks losing player trust and asset value all at once.”

The Alternative: ‘Outsourcing Regulatory Compliance Infrastructure’

Is there a way for developers to focus on creation while satisfying regulatory requirements? Soderberg proposes ‘compliance services’ as a solution. Instead of directly functioning as financial institutions, game companies can delegate KYC, AML, and token economy design to external certified services, reducing legal burdens.

These services automatically enforce wallet verification, transaction limits, and regional access restrictions at the smart contract level. As a result, players can enjoy the game without feeling the impact of regulation, and developers can meet all legal requirements in advance. He emphasized, “The most ideal structure is one where regulation is integrated into the game without compromising the player experience.”

Web3 Gaming’s Next Survival Condition: ‘Legality’

The recent collapse of Web3 games clearly demonstrates how fragile digital ownership without regulation is. To protect both investment and user trust, the era has come where ‘legality’ becomes as important as ‘technology’ in competitiveness.

( Market Interpretation

The 2025 Web3 gaming collapse has highlighted the fiction of digital asset ownership and the issues of regulatory gaps. Survival now depends on compliance with regulations.

) Strategic Points

• Games targeting global markets must review relevant regulations such as the Markets in Crypto-Assets (MiCA) and FinCEN before launch
• Small and medium developers should consider outsourcing regulatory compliance infrastructure
• Automating regulation at the smart contract level is key to building trust

( Terminology

• Crypto-asset Market Law (MiCA): EU regulation covering issuance, operation, and protection of crypto-assets
• KYC/AML: Customer verification and anti-money laundering measures, mandatory for financial services