Is the Metaverse Considered as Electronic Commerce in Malaysia?

Written by Fatin Ismail

The Metaverse

To put it simply, the Metaverse is a form of cyberspace, or a network of multiple 3D virtual spaces or worlds linked together to form a virtual universe where users worldwide can enter and navigate through the Metaverse and interact with others with the use of digital avatars.

This advancement in technology and the rise of the Metaverse continues to reshape the way we interact and transact in a shared virtual space blending digital and real-world experiences. The issues arising from this has captured both commercial and legal attention.

In Malaysia, one of the key questions emerging from this development is whether activities conducted in the Metaverse are considered as electronic commerce (‘eCommerce’) and therefore fall within the existing regulatory framework.

E-Commerce under Malaysian Law

eCommerce in Malaysia is primarily given legal recognition by the Electronic Commerce Act 2006 (‘ECA 2006’).

The ECA 2006 facilitates electronic transactions by recognising the legal validity of electronic messages, documents, and contracts. It broadly covers ‘commercial transactions’ conducted via electronic means, encompassing the supply or exchange of goods or services.

While Malaysian law does not explicitly mention the ‘Metaverse’, many of its activities share the same fundamental characteristics as eCommerce.

Users and businesses in the Metaverse engage in the buying and selling of virtual goods and services, which may include digital assets, event tickets, advertising space, and even virtual real estate. These exchanges are carried out electronically, fulfilling the core criteria of a commercial transaction conducted through electronic means.

Accordingly, such activities can fall within the scope of eCommerce regulation under existing Malaysian laws, even if the transaction takes place in a virtual or immersive environment.

Regulatory Gaps and Emerging Challenges

Despite this conceptual alignment, the Metaverse introduces several legal uncertainties that existing frameworks were not designed to address:

1. Jurisdictional ambiguity arising from transactions which transcend physical borders. Determining where a transaction occur and consequently, which laws apply .
2. The nature of virtual assets remains unclear whether these “digital collectibles” constitute “goods” or “services” under Malaysian law. This classification affects consumer protection rights and taxation obligations.
3. Foreign providers offering digital services to Malaysian consumers are already subject to Malaysia’s Service Tax on Digital Services regime. However, how this applies to metaverse-based activities (such as NFT sales or avatar customisations) remains to be clarified.
4. Interactions within metaverse platforms often involve user-generated content and personal data. This triggers potential overlap with the Communications and Multimedia Act 1998 and Personal Data Protection Act 2010, as well as MCMC’s Content Code.

Practical Implications for Businesses

Businesses operating in or through the metaverse, particularly those targeting Malaysian consumers, should assume that existing eCommerce, consumer protection, and data laws apply.

Among others, they should consider:

1. Registering their business under the Registration of Businesses Act 1956 or Companies Act 2016, if conducting trade in Malaysia.
2. Keeping abreast with requirements of service tax on digital services in Malaysia.
3. Implement data protection and cybersecurity safeguards, given the immersive and interactive nature of the Metaverse.
4. Establish clear terms of service addressing jurisdiction, dispute resolution, and user conduct within the virtual environment.

Conclusion

Whilst Malaysia has yet to enact laws specifically governing the Metaverse, the existing legal framework provides a broad foundation for regulating commercial activities conducted in digital or virtual spaces. This means that transactions in the metaverse may be treated as eCommerce, subject to the same consumer protection, disclosure, and taxation obligations as traditional online transactions.

As the metaverse evolves from concept to commercial reality, businesses and regulators alike must remain proactive, ensuring that innovation continues to flourish within a robust and responsible legal environment.

We previously wrote about the Metaverse and its Legal Issues as well as the Metaverse and Legal Jurisdiction.

Richard Wee Chambers also previously hosted a webinar with Dr Lau Pin Lean of Brunel University London to discuss the Metaverse and the Law.

Published on 11 November 2025