In a recent report titled "Banking in video games and virtual worlds," the United States Consumer Financial Protection Bureau (CFPB) has turned its attention to the intersection of crypto and gaming, warning of potential scams and inadequate consumer protections within virtual environments.

The report, released on Thursday, April 4, underscores the growing interest among gaming creators in linking virtual assets to real-world value, despite these platforms still lagging behind mainstream gaming giants like Roblox and Fortnite. The agency specifically notes the proliferation of crypto assets within virtual worlds, facilitated by third-party trading platforms that allow users to convert digital items into fiat currency.

Particularly, the report highlights the ability to exchange crypto assets found in virtual environments such as Decentraland and The Sandbox for fiat currency on various cryptocurrency platforms.

Alexander Grieve, government affairs lead at Paradigm, suggests that reports like the one published by the CFPB may signal impending regulatory actions. The agency, along with other federal bodies, is likely exploring its regulatory role in the crypto space, with this report serving as one avenue for such efforts.

Furthermore, the CFPB report draws parallels between online video games and traditional banking, highlighting the lack of federal protections despite the increasing prevalence of banking and payment activities within virtual realms. Complaints received by the agency include instances of hacking attempts, account theft, and losses of assets within games, with consumers expressing frustration over the lack of support from gaming companies.

CFPB Director Rohit Chopra has emphasized the trend of Americans converting substantial sums into digital currencies for gaming purposes. With financial activities shifting to virtual environments, the CFPB aims to protect consumers from potential fraud and scams.

In line with this focus, the CFPB has introduced a proposed rule titled "Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications," granting the agency oversight over "larger nonbank firms" offering digital wallet and payment app services. While the rule only sporadically references cryptocurrency in its 62-page document, critics argue that it inappropriately asserts authority over cryptocurrency-related activities.