The Financial Industry Regulatory Authority (FINRA), a non-governmental, self-regulatory organization, recently published a report outlining the potential regulatory implications for securities and finance firms operating in the metaverse.
Along with a breakdown of the current state of metaverse activity in the finance industry and projections for the technology’s future, FINRA also dedicated several paragraphs of the report to reminding businesses that both its rules and relevant government regulations apply to their activities in the metaverse just as they would otherwise.
“Member firms should also be mindful of the potential implications to their regulatory obligations as they consider whether to incorporate the metaverse into their internal systems and processes or use this technology within product offerings,” wrote the authority in the reportpublishedon Oct. 24.
The metaverse opportunity
The report indicates global metaverse revenue “opportunity” could reach $800 billion in 2024 and is “expected, by some, to contribute over $3 trillion to global Gross Domestic Product (GDP) by 2031.”
Whilemetaverse technologyoften tends to focus on gaming and industrial applications, FINRA investigated several use cases for the finance industry including data visualization, digital twins, and virtual trading. It also identified several challenges facing the metaverse industry as a whole and, specifically, finance use cases.
Chief among the challenges identified wassecurity and privacy. As the term “metaverse” is somewhat nebulous and covers numerous technology verticals, ensuring specific platforms meet the regulatory needs of financial institutions, brokers, and dealers is of the utmost importance for smooth adoption, according to the report.
FINRA also pointed out that, despite the experimental nature of many business projects in the metaverse, those endeavors still fall under the same legal constraints and requirements as any other dealings in the financial services industry.
Per the report:
Rules in the metaverse must be followed asserts FINRA