According to experts, the use of crypto assets on virtual reality platforms will require “strong consumer protection”

Bank of England calls the adoption of metaverse threat to financial stability

13.08.2022 - 06:45

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1 min

What’s new? Experts at Bank of England Owen Lock and Teresa Cascino said that the widespread use of crypto assets in the metaverse could pose a systemic risk to financial stability and will require ‘strong consumer protection.” According to them, the threat is that large volumes of “real economic transactions” in cryptocurrencies will go through decentralized platforms.

Lock and Cascino’s press release

What else do the bank’s representatives say? Lock and Cascino noted that an important step for regulators is to address the risks of cryptocurrencies in the metaverse before digital assets reach systemic status. Experts presented a scenario in which consumers spend a lot of money and time in virtual worlds: households will be able to store some of their savings in digital assets, businesses, in turn, will begin accepting payments in cryptocurrencies, and financial institutions will begin offering industry services.

In March, the Bank of England Financial Policy Committee already stated that the adoption of digital assets posed financial risks. In this regard, the regulator requested additional powers from the government to strengthen oversight and regulation of the sector and urged commercial banks to exercise caution.

On July 20, the UK’s new finance minister Nadhim Zahawi submitted a bill to the parliament proposing to regulate stablecoins as a form of payment. The document is aimed to improve the flexibility and competitiveness of the country’s financial system and to create a standard for the use of stablecoins when making transactions

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