A Growing Metaverse Poses Systemic Risks Regulators Need to Recognize, BOE Researchers Say




  • In Business
  • 2022-08-09 17:06:40Z
  • By CoinDesk
 

Regulators need to be aware of the systemic risks posed by the possible increased use of the metaverse and be ready to mitigate those risks, Bank of England researchers said.

If an open metaverse develops, existing risks from digital assets may have systemic financial stability consequences, they said in a blog post on Tuesday. Regulatory bodies, including the BoE, international financial watchdog Financial Stability Board and the Basel Committee on Banking Supervision, the global standard setter for banking regulations, are looking to set standards and regulations to limit potential crypto risks.

"Widespread adoption of crypto in the metaverse, or any other setting would require compliance with robust consumer protection and financial stability regulatory frameworks," economist Owen Lock and policy analyst Teresa Cascino wrote.

The metaverse is a virtual reality where people can buy and sell digital property using non-fungible tokens that are tied to the blockchain. Some see it as a digital representation of the real world, where people even hold jobs. Some artists have already set up galleries in it, and celebrities and even banks have dived in. In February, it was described as a $5 trillion opportunity by Morgan Stanley.

A larger metaverse means households may hold a greater proportion of their wealth in crypto and more companies may decide to accept crypto payments, the researchers said. Financial institutions and banks may decide to increase their exposure to crypto.

On top of that, people employed in the metaverse could risk losing their jobs if the crypto market performs badly and metaverse activity drops, the researchers said.

"An important step is therefore for regulators to address risks from crypto assets' use in the metaverse before they reach systemic status," the researchers said.

COMMENTS

More Related News

First Mover Asia: IOTA
First Mover Asia: IOTA's Shimmer Joins the Race to Become the Next Big Blockchain; Bitcoin Seesaws Before Holding Near $19.5K

The unveiling of a new blockchain platform comes amid a flurry of blockchain startups, each promising to be faster and cheaper than other protocols.

1 in 5 Americans Has Crypto in Retirement Portfolio, but Which Generation Is Really Banking on It?
1 in 5 Americans Has Crypto in Retirement Portfolio, but Which Generation Is Really Banking on It?

Cryptocurrencies have been making their way into mainstream investing for quite some time, including in retirement plans. Despite the downturn the space has ...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • Henry
    (2022-08-10 14:44:48Z)

    Incredible quest there. What occurred after?

    Good luck!

    REPLY
  • Ferdinand
    (2022-08-10 14:47:53Z)

    When I originally commented I clicked the "Notify me when new comments are added" checkbox and now each time a comment is added I get four e-mails with the same comment.
    Is there any way you can remove people from that service?
    Appreciate it!

    REPLY
  • Rick
    (2022-08-10 14:53:37Z)

    First off I want to say awesome blog! I had a quick question that
    I'd like to ask if you don't mind. I was interested to find out how you center yourself and clear your mind prior to writing.
    I've had a tough time clearing my mind in getting my thoughts out there.

    I truly do enjoy writing but it just seems like the first
    10 to 15 minutes are usually wasted simply just trying to
    figure out how to begin. Any recommendations or tips?

    Thank you!

    REPLY

Top News: Business