The organisation made clear that users can exchange their bitcoin holdings in virtual worlds like Decentraland and The Sandbox for fiat money on other cryptocurrency exchanges. In a recent report, the US Consumer Financial Protection Bureau (CFPB) specifically targeted cryptocurrency-focused gaming and warned against scams and inadequate consumer protections in video games and virtual environments.
Following a report titled “Banking in video games and virtual worlds,” which was made public on Thursday, April 4, the consumer protection agency notes that more and more game developers are looking to connect virtual goods to the real world. Though it still lags behind popular gaming platforms like Roblox or Fortnite, the agency brought attention to the expansion of cryptocurrency assets within virtual worlds.
Users have the option to exchange digital assets into fiat currency through third-party trading platforms. According to the report: Notably, a number of the biggest publishers of virtual game worlds have shown an increasing desire to market their virtual goods as crypto-assets that can be exchanged outside of the virtual world’s economy.
According to the paper, bitcoin assets in virtual worlds such as Decentraland and The Sandbox have the potential to be traded for fiat money on other cryptocurrency platforms.
Government affairs lead at Paradigm, Alexander Grieve, stated that studies such as the one released by the CFPB may indicate impending regulatory actions. He proposed that this study could be one way the CFPB, like many other government agencies, pursues its regulatory role in the cryptosphere.
Virtual worlds and online video games are starting to resemble regular banking, but they are not protected by federal law, according to a CFPB analysis. Consumers complained to the agency about lost or stolen assets in games, attempted hacking, and account theft. They were also upset about the lack of assistance they received from gaming businesses.
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 stated that it seeks to protect consumers from fraud and scams as banking and payments move into virtual spaces.
By presenting a proposed rule titled “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications,” the CFPB has redirected its attention to cryptocurrencies. By virtue of this rule, the agency will have supervisory authority over “larger nonbank firms” that offer payment app and digital wallet services.
It requires nonbank financial institutions handling more than five million transactions per 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” in an unacceptable manner.