Owen Lock and Teresa Cascino

Cryptoassets could have important roles within the metaverse – a decentralised, immersive next generation of the internet. Cryptoassets enable verifiable ownership of digital items, and when built to common standards, can move interoperably between web applications – increasing the asset’s value proposition. They can also align the incentives of developers, content creators, users and investors on metaverse platforms, and are required to incentivise miners and validators to add metaverse-based transactions to the underlying blockchain. We argue that if an open and decentralised metaverse grows, existing risks from cryptoassets may scale to have systemic financial stability consequences. Widespread adoption of crypto in the metaverse, or any other setting would require compliance with robust consumer protection and financial stability regulatory frameworks.