CFPB report targets financial transactions in video games

The Consumer Financial Protection Bureau issued a report examining the growth of financial transactions in online video games and virtual worlds.

Details: In the report, the CFPB said:

• These platforms increasingly resemble traditional banking and payment systems that facilitate storing and exchanging billions of dollars in assets, including virtual currencies.

• Some virtual worlds and games use cryptoassets—such as non-fungible tokens—as virtual items or game currency.

• Gaming companies provide little customer support when consumers experience financial harm.

• Gaming companies assemble gamers’ personal and behavioral data.

• It will monitor video games and virtual worlds to ensure compliance with federal consumer financial protection laws.

Crypto Links: The report cites the susceptibility of online games to crypto-based crime, such as the breach of the Axie Infinity online world by North Korea’s state-sponsored Lazarus hacking group. The estimated $600 million in stolen assets were laundered through a crypto mixer, which malicious actors use to shroud key transactional details.

ICBA View:

• In a recent comment letter, ICBA said the Financial Crimes Enforcement Network’s proposal to institute recordkeeping and reporting requirements for financial institutions is insufficient to adequately protect against crypto-related illicit financial activity.

• ICBA also supports a CFPB proposed rule that would establish bureau oversight of Big Tech firms and other large nonbank tech companies that offer payments services, which it said would ensure these entities are subject to the same regulatory requirements as banks when offering bank-like services.