The US consumer agency points out the dangers of virtual cryptocurrencies

The US Consumer Financial Protection Bureau (CFPB) has targeted crypto-centric games in a recent report.

In its “Banking in Video Games and Virtual Worlds” report released on Thursday, April 4, the consumer protection agency highlights the desire among game developers to connect virtual objects with reality.

While still following major gaming platforms such as Roblox or Fortnite, the agency highlighted the growth of crypto assets in virtual worlds. Third-party trading platforms allow users to convert digital assets into fiat currency. The report says:

“In particular, some of the biggest publishers of the virtual game world have expressed a growing interest in placing their virtual goods as crypto-assets that can be traded outside of the game's economy.”

The report states that crypto assets in virtual environments such as Decentraland and The Sandbox can be exchanged for fiat currency on other crypto platforms.

Alexander Grieve, head of government affairs at Paradigm, said reports such as those published by the CFPB could signal future regulatory action. The CFPB, like other federal agencies, has indicated that it wants to play a regulatory role in the cryptosphere, and this report could serve as one way.

The CFPB report notes that online video games and virtual worlds are becoming similar to traditional banking, but lack federal protections. The agency has received complaints about hacking attempts, account theft and lost property in games, with consumers complaining about lack of support from game companies.

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CFPB Director Rohit Chopra pointed out that there is a growing trend of Americans turning billions of dollars into digital currency for gaming. As banking and payments move into virtual realms, the CFPB said it aims to protect consumers from fraud and scams.

The CFPB has shifted its focus to cryptocurrencies, introducing a proposed rule titled “Determining Large Participants in General Purpose Digital Consumer Payment Applications.” This regulation gives the agency oversight over “large non-banking organizations” that provide digital wallet and payment app services.

It mandates that non-bank financial entities handle more than five million transactions each year to comply with regulations imposed on large banks and credit unions. Although the 62-page law only mentions cryptocurrency sparingly, critics argue that it inappropriately “gives authority over cryptocurrency.”

Magazine: Legislators' fear and skepticism fuel proposed crypto regulations in the US.