A recent report states that the metaverse is primed for regulation because of the increasing capacity for crime.
According to crypto researcher Elliptic Connect, corporations are already exploring the potential of the metaverse to create new economic opportunities. Elliptic’s recent report also highlighted Facebook’s recent rebranding to Meta, along with the rising Google searches for ‘metaverse.’
Like Meta, many businesses are struggling to find immediate profitable uses for the technology, according to the report. According to the study, 58% of respondents expected that the metaverse would provide some commercial opportunities within five years for their companies. Citibank also predicts that the metaverse will be worth up to $13 trillion by 2030. The potential for investment is significant, but there is also the potential for crime to increase.
Cybercrime in the Metaverse
Elliptic’s report focuses on the growing number of ways criminals are stealing from users in the metaverse. The report includes standard financial crimes, like scams and fraud, as well as more specific digital asset crimes. These include hacking and stealing digital assets from metaverse users.
As well as highlighting crime, the report also pointed out how the shared digital space facilitated it. Wearable non-fungible tokens, such as digital fashion and luxury items, are becoming increasingly popular. According to the report, these items could open up new avenues for digital money laundering. Additionally, it warned against the metaverse facilitating sex crimes, like non-consensual porn and sexual harassment.
Shared digital space regulation
Consequently, the report suggested that the growing risks would attract the attention of regulators in the coming year. A simple clarification of where pre-existing regulation extends to metaverse activity might be sufficient in some cases.
The report suggests that regulators will also need new approaches as the new paradigm creates new opportunities for crime. To engage developers in the DeFi space, the report suggests leveraging regulatory sandboxes. Abu Dhabi Global Market is already doing this, according to the report. In the United Arab Emirates, the Virtual Assets Regulatory Authority has established a presence in the metaverse, setting a precedent.