Key takeaways:
- In its research, the CFPB specifically addressed gaming around crypto, warning against fraud and lowering consumer protections in virtual and video game environments.
- The agency stressed the importance of crypto-asset virtual worlds despite their lesser popularity compared to famous gaming platforms like Roblox or Fortnite.
In its research, the Consumer Financial Protection Bureau (CFPB) specifically addressed gaming around cryptocurrencies, warning against fraud and lowering consumer protections in virtual and video game environments.
The CFPB’s research, “Banking in Video Games and Virtual Worlds,” released on Thursday, emphasizes how game developers are becoming more and more interested in connecting virtual objects to the real world. Although not very common in virtual games, cryptocurrency is becoming more popular.
The agency stressed the importance of crypto-asset virtual worlds despite their lesser popularity compared to famous gaming platforms like Roblox or Fortnite.
Users can enhance their liquidity beyond traditional gaming marketplaces by converting virtual assets into fiat currency through third-party trading platforms. According to the agency report:
“Notably, some of the largest virtual gaming world publishers have expressed growing interest in positioning their virtual items as crypto-assets that have the ability to be traded outside of the game’s economy.”
According to the organization, cryptocurrency assets in virtual worlds such as Decentraland and The Sandbox can be traded for fiat money on other cryptocurrency platforms.
According to Paradigm’s lead for government affairs, Alexander Grieve reports like the one released by the CFPB on Thursday may indicate impending regulatory actions.
He said that the CFPB, like many other government agencies, is looking to get involved in the crypto space through regulation, and this study would be one way to do so—primarily if changes are made to their Larger Participants wallet rule.
Virtual worlds and online video games are starting to resemble regular banking, but they don’t have the anticipated regulatory protections, according to the CFPB. Consumers expressed discontent with gaming businesses’ lack of help, and the agency received complaints about attempted hacking, account theft, and asset loss within games.
The growing habit of Americans changing billions of dollars into virtual currencies for gaming was brought to light by CFPB Director Rohit Chopra. The CFPB works to protect customers from fraud and scams as banking and payments move online.
With the introduction of a proposed rule named “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications,” the US CFPB has redirected its attention to cryptocurrencies. This rule gives the agency control over larger nonbank companies that offer services for payment apps and digital wallets.
It requires nonbank financial institutions handling more than five million transactions a year to follow rules similar to those that apply to large banks and credit unions. Despite the 62-page rule’s infrequent mention of cryptocurrencies, others argue that it “asserts authority over cryptocurrency” improperly.
