Recently, the metaverse has gained immense popularity as an emerging space. Experts estimate that by 2024 the total value of virtual reality could exceed $800 billion.
However, with such advances comes scrutiny from financial regulators…and for a good reason. Many metaverse projects opt for dubious income schemes. A more striking example would be the sale of virtual land.
Although there is often a line between what is considered a security and what is not, the US Securities and Exchange Commission can get in the way, as under the law, the sale of virtual land is equated with the sale of a security.
Large GameFi platforms generating multi-billion dollar economies require domestic financial policies. Accordingly, such platforms should have employees responsible for compliance with legal actions before regulatory authorities.
The Metaverse could be financially damaged, as was the case with Yuga Labs, the company behind the Otherside Metaverse and the BAYC Collection. The company manager’s discord was hacked earlier this year. The damage is estimated at 200 ETH.
Metaverse projects and companies such as Yuga Labs should be penalized for not having sound monetary and technical controls, as has happened to some Wall Street banks. They used banned messaging apps and were fined $1.8 billion.
Experts believe that metaverse projects should determine what type of asset classes they issue: security, a utility token, etc.
Then the projects must prepare and develop a regulatory framework. These rules are more likely to include questions about the placement of securities or the fight against money laundering. Experts warn about finding a balance at this stage, as heavy regulation can stifle innovation.
Another global problem is the leakage of confidential information. Existing legislation in some states, such as California, has forced tech companies to hire user data protection specialists. Experts believe that the metaverses should follow the same path to maintain data privacy.
The negative impact on a person’s mental health is another significant aspect. However, a user who encounters abuse in the metaverse cannot report it, as the ecosystem is not (yet) under Internet abuse law.
