Metaverse urged to regulate crypto risks, says Bank of England

Researchers from the Bank of England said that the Metaverse could host large amounts of cryptocurrency transactions that could pose risks to users and investors. Blog post Tuesday.

according to Owen Locke from the Resilience Division at the Bank of England And the Theresa Cassino, Bank’s FinTech CenterInstitutions have been urged to regulate the use of cryptocurrencies to mitigate the risks of a meltdown in the Metaverse.

In the post, the researchers wrote that current risks from crypto assets such as non-fungible tokens (NFTs) and blockchain could lead to “systemic consequences for financial stability,” adding,

“If a large proportion of the open metaverse materializes, households may hold a greater share of their wealth in crypto assets to make payments based on the metaverse or for investment purposes, and companies may increasingly receive payments for goods and services in crypto assets, and sell digital assets. […] in metaverse. Indirectly, if people are increasingly hired for jobs in settings based on the metaverse, their employment outcomes may be affected by the risks posed by crypto assets.”

While the evolution of the Metaverse remains uncertain, they state that their cryptocurrency scenario could become certain, leading to “balance sheet losses for households and businesses, impact on unemployment, sale of traditional non-bank assets” and other possible scenarios. .

The post also evaluated the pros and cons of centralized and decentralized metavers, with the former offering “build efficiency advantages” at the expense of “rent extraction” such as private data and high content creation fees, and the latter being enabled with blockchain and crypto-sets across disparate platforms that require greater interoperability, Among other things.

The news comes like metaverse companies like Croquet companyLuna Market, Meta Platforms, STYLY, Sandbox, Ready Player Me, and many others working on Create interoperable platforms To share virtual worlds in a secure environment, monetizing creative content and the growth of the digital economy.

Global governments and regions, including Dubai, China, South Korea, the United States and the European Union, began Exploring the potential From Metaverse with massive multi-million dollar investment and government backed legislation to realize the potential of Web3 and its solutions.

Numbers from her Citibank have found Metaverse is set to reach a total market value of US$13 trillion by 2030 and host up to five billion users, leading to the development of a virtual economy.

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