The United States Consumer Financial Protection Bureau (CFPB) report states that online video games and virtual worlds are similar to traditional banking but lack federal protections.
Inputs that matter: In its "Banking in video games and virtual worlds" report, released on Thursday, April 4, the consumer protection agency highlights gaming creators who bridge virtual items to reality.
- CFPB Director Rohit Chopra highlighted the increasing trend of Americans converting billions of dollars into digital currencies for gaming.
- With banking and payments shifting to virtual realms, the CFPB said it aims to safeguard consumers from fraud and scams.
The opportunity: The CFPB has shifted its focus toward cryptocurrencies, introducing a proposed rule titled "Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications."
- According to the CFPB, "Gaming assets are stored on a player's accounts and used as a medium of exchange for all sorts of transactions within these worlds, including the purchase of goods and services and person-to-person ("P2P") transfers."
- The report explains that the CFPB "is monitoring markets—regardless of the infrastructure used—where financial products and services may be offered, including video games and virtual worlds."
Zoom in: Most games have their currency for in-game purchases, including:
- Robux is the in-game currency for Roblox.
- V-Bucks is the currency used in the popular game Fortnite.
- Minecraft players can use Minecoins for in-game purchases.
- The currencies are purchased with real money, and there are exchange rates for them. Rates fluctuate, but in July 2023, $10 was equal to around 800 Robux, 1,252 V-Bucks, and 1,700 Minecoins.
Between the lines: Unlike cryptocurrencies, these gaming assets are not decentralized and are designed to function only within the gaming platform.
- Gaming companies use behavioral psychology to manipulate users into spending, says Prof Sarah Mills, and the link between gaming and gambling is becoming "increasingly blurred," she explains.
Follow the money: The video game industry generated 197 billion U.S. dollars in 2023, most of that coming from in-game purchases.
- Oslomet reports, "Almost all children and teenagers play video games, making it a crucial social meeting place."
- "There's no sharp distinction between their online and offline world."
Go deeper: Subscribe to the free newsletter to learn more.
Read More
- https://cointelegraph.com/news/us-cfpb-flags-risks-in-virtual-worlds-crypto-economy
- https://www.consumerfinance.gov/data-research/research-reports/issue-spotlight-video-games/
- https://www.carybank.com/small-business/resources/financial-education/2023/07/money-in-video-games-its-virtually-everywhere.html
- https://www.bbc.com/news/business-65372710
- https://www.statista.com/topics/3436/gaming-monetization/
- https://deepblue.lib.umich.edu/bitstream/handle/2027.42/155343/Justin?sequence=1
- https://www.oslomet.no/en/research/featured-research/buying-popularity-how-children-are-influenced-by-in-game-spending