CFPB stresses risks in crypto-focused gaming, virtual worlds

Furthermore, the report indicates a growing interest among major virtual gaming world publishers to explore crypto-assets as a means for players to trade virtual items outside the game’s economy, potentially expanding the market’s reach and risk exposure.

In response to the evolving landscape, the CFPB has proposed a rule to tighten oversight of digital financial transactions. The proposed rule, dubbed “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications,” seeks to bring larger nonbank companies, including those offering digital wallets and payment applications, under similar regulatory scrutiny as traditional financial institutions. However, critics claim the rule inappropriately claims jurisdiction over crypto.

The CFPB’s report and regulatory efforts come with growing concerns over the security of players’ assets in virtual gaming worlds. Consumers have reported hacking attempts, account theft, and loss of access to in-game assets, often with little support from gaming companies. The situation emphasizes the need for enhanced protections as more financial activities migrate to these digital platforms.

As the CFPB continues to explore its regulatory role in the crypto space, stakeholders like Alexander Grieve, government affairs lead at Paradigm, suggest that such reports could be a precursor to rulemaking, signaling a potential tightening of regulations around virtual economies and digital assets.