Researchers from the Bank of England stated in a statement that large amounts of cryptocurrency transactions could be hosted on the Metaverse, which could present risks for investors and users. blog post Tuesday
According to Owen Lock of the BoE’s Resilience Division And Teresa Cascino, the Bank’s Fintech HubTo mitigate the risk of meltdown in the Metaverse, institutions were urged by the government to regulate cryptocurrency usage.
In the post, the researchers wrote that existing risks from cryptocurrency assets such as non-fungible tokens (NFTs) and the blockchain could lead to “systemic financial stability consequences”, adding,
“If a sizable open-metaverse materialised, households may hold a greater share of their wealth in cryptoassets to make metaverse-based payments or for investment purposes, and corporates may increasingly take payments for goods and services in cryptoassets, and sell digital assets […] In the metaverse. Indirectly, if people are increasingly employed in jobs in metaverse-based settings, their employment outcomes may be affected by risks from cryptoassets”
Despite the Metaverse’s evolution remaining uncertain, they stated their cryptocurrency scenario could become a certainty, resulting in “balance sheet losses for households and corporates, an impact on unemployment, fire-sales of traditional assets from non-banks” and other potential scenarios.
A statement by the Bank of England released a few hours back.@punk6529 It was correct. They’re coming for our JPEGs and the only way we can win this is by onboarding 100M people to the open metaverse ASAP. pic.twitter.com/8ddhHxqiY3
— Leonidas.eth (@LeonidasNFT) August 9, 2022
The post also weighed the pros and cons of centralised and decentralised metaverses, with the former providing “building efficiency advantages” at the cost of “rent extraction” such as private data and high content creation fees, and the latter enabled with blockchain and cryptoassets across disparate platforms requiring greater interoperability, among others.
The news comes as metaverse companies such as Croquet Corporation and Luna Market, Meta Platforms and STYLY, The Sandbox and Ready Player Me work together to create interoperable platforms that allow users to share virtual worlds in a safe environment. This will lead to the monetisation and growth of a digital industry.
The Metaverse has been explored by governments around the world, including the United States, China, South Korea and Dubai. They have made multimillion-dollar investments as well as enacted legislation that is government-backed to realize the full potential of Web3’s solutions.
Citibank figures have shown that the Metaverse will reach a total market worth $13 trillion USD by 2030. It will also host up to 5 billion users, which could lead to the development a virtual economy.