The Consumer Financial Protection Bureau (CFPB) of the United States has recently released a report that focuses on the risks associated with crypto-centric gaming. The report, titled “Banking in video games and virtual worlds,” highlights the growing interest among gaming creators in linking virtual items to the real world. While not as popular as mainstream gaming platforms like Roblox or Fortnite, crypto assets in virtual worlds are experiencing significant growth. Third-party trading platforms allow users to convert digital assets into traditional currency. The report specifically mentions that platforms like Decentraland and The Sandbox enable users to exchange crypto assets for fiat currency on other cryptocurrency platforms.
According to Alexander Grieve, the government affairs lead at Paradigm, reports like the one published by the CFPB could indicate upcoming regulatory actions. He believes that the CFPB, like other federal agencies, is looking to establish its regulatory role in the crypto industry, and this report could be a step in that direction.
The CFPB report highlights the similarities between online video games, virtual worlds, and traditional banking. However, it also points out that the former lack federal protections. The agency has received complaints from consumers regarding hacking attempts, account theft, and loss of assets within games. Users have expressed dissatisfaction with the lack of support from gaming companies. CFPB Director Rohit Chopra has emphasized the trend of Americans converting billions of dollars into digital currencies for gaming purposes. As banking and payments increasingly shift to virtual realms, the CFPB aims to protect consumers from fraud and scams.
In line with its focus on cryptocurrencies, the CFPB has introduced a proposed rule called “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications.” This rule grants the agency oversight over nonbank firms that provide digital wallet and payment app services, as long as they process over five million transactions annually. These entities will be required to adhere to regulations similar to those imposed on major banks and credit unions. While the rule mentions cryptocurrency sparingly, critics argue that it inappropriately asserts authority over the crypto industry.
Overall, there is a growing concern among lawmakers about the risks associated with cryptocurrencies, which is driving proposed regulations in the United States.
Virtual Crypto Economies Pose Risks, Warns US Consumer Agency