BoE requires oversight of Metaverse Crypto use

The Bank of England (BoE) warns that “robust consumer protection” would be needed if cryptocurrencies achieved widespread adoption in the metaverse.

BoE researchers Owen Lock and Teresa Cascino wrote in a blog post on Tuesday (August 9) that a fully realized metaverse could host large volumes of transactions conducted using cryptocurrencies. The greater the volume of these transactions, the greater the risk, Cascino and Lock said.

“The importance of cryptoassets in the open metaverse means that if an open and decentralized metaverse grows, existing risks from cryptoassets can scale to have systemic consequences for financial stability,” the researchers wrote.

“An important step is therefore for regulators to address risks from the use of cryptoassets in the metaverse before they reach systemic status,” they added.

Lock and Cascino also noted that if a large-scale open metaverse came about, households could hold a larger share of their wealth in crypto to make payments or investments in the metaverse. In addition, companies can increase the acceptance of crypto for payments for goods and services, or sell digital assets such as clothing that are not fungible tokens (NFTs) in the metaverse.

“Indirectly, if people are increasingly employed in jobs in metaverse-based settings, their employment outcomes may be affected by risk from cryptoassets (loss of trust in the cryptoasset ecosystem may result in reduced metaverse-based activity and subsequent loss of jobs),” the blog post said.

Despite a tidal wave of hype, the metaverse remains a vague concept, and not just because the technology needed to deliver the immersive experience envisioned by its proponents is still years away.

Read more: What is a metaverse and why have a fashion show?

However, that hasn’t stopped companies like Meta, Microsoft, Alibaba and Ikea from starting an organization to figure out what the metaverse is.

See more: Is Metaverse just the web with 3D glasses?

“And while the Metaverse Standards Forum (MSF) is in many ways similar to the World Wide Web Consortium (W3C) that developed the modern Internet, the scope of the technical problems it works on—everything from photorealistic content authoring and geospatial systems to physical simulation and online economies—shows how unfinished a concept it is,” wrote PYMNTS in June.

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