The U.S. Consumer Financial Protection Bureau (CFPB) is looking at financial transactions conducted on online games and gaming platforms, the agency revealed in a new report on Thursday. The agency said its regulation is part of its broad mandate to protect consumers in financial markets, wherever those markets exist.

The CFPB noted that in some of today’s most popular video games, players often earn or purchase in-game currency, essentially converting fiat currency into in-game currency. The in-game currency is then used to purchase in-game goods and services, including virtual items.

Whether it’s buying extra lives or special abilities in a casual game or earning “virtual currency” or tokens in a play-to-earn game, the CFPB labels it “banking in video games and virtual worlds.” If game assets are a medium of exchange for goods and services or peer-to-peer transfers, they amount to banking and payment services.

Regulators said that while these crypto worlds are nowhere near the popularity of virtual game worlds like Roblox, Second Life or Fortnite, they are still worthy of attention because the prevalence of third-party crypto asset trading platforms, where users can convert the virtual worlds’ native crypto assets into fiat currencies, makes them more permeable than typical gaming markets.

As interest and activity in the crypto gaming space grows, so too does regulatory scrutiny. In the first quarter of last year, the value of several gaming tokens, including Gala (GALA), Immutable (IMX), Floki (FLOKI), and Ronin (RON), surged, reaching a market cap of more than $26.9 billion, according to Coingecko.

Even AI developers are looking to get into blockchain gaming. Last week, AI analytics company Helika launched a $50 million crypto gaming accelerator program.

The U.S. Consumer Financial Protection Bureau (CFPB) also highlighted its research into “concerns” such as fraud, theft and other criminal activity. The agency also said it would look at whether platforms provide users with recourse if their funds are lost.

The agency said gaming companies often adopt a "beware the buyer" approach, placing the burden on individual players to avoid these scams and phishing attempts. They may lock or ban player accounts suspected of scams and phishing, but offer few remedies for victims.

The U.S. Consumer Financial Protection Bureau (CFPB) pointed out that some third-party websites allow players to exchange in-game items and currencies for Bitcoin, and specifically mentioned the "Linden Dollars" in Second Life. Players can use legal currency to purchase Linden Dollars through the official LindeX of Second Life and transfer these Linden Dollars to third parties through payment platforms such as PayPal and Skrill.

The agency said that between 2011 and 2013, third-party websites allowed transactions between Linden Dollars and Bitcoin. By 2021, Second Life reported an average of 200,000 users from 200 countries per day, generating a GDP equivalent to more than $600 million, a figure that is larger than that of some small countries.

In addition to Bitcoin, the CFPB report also highlights blockchain-based games and platforms, including Ethereum-based Axie Infinity, Decentraland, The Sandbox’s MANA and SAND tokens, and NFTs that can be traded and sold for dollars.

Also gaining attention are DeFi lending platforms like MetaLend, a crypto financial services company that enables Axie Infinity players to obtain loans while playing using in-game NFTs.

The CFPB also mentioned the hack of Axie Infinity’s Ethereum sidechain Ronin in March 2022, which used stolen private keys to steal more than 173,600 ETH and 25.5 million USDC, worth a total of $622 million at the time.

The report did not give a clear course of action, but the U.S. Consumer Financial Protection Bureau (CFPB) said it would continue to work with other regulators to monitor this area. The report also added that in the future, the CFPB will focus on companies that collect and sell sensitive consumer data (such as consumers' payment history), especially when this data is collected and commercialized without the user's knowledge. #加密游戏监管  #CFPB