As a seasoned analyst with over two decades of experience in the financial industry, I have witnessed the transformation of technology reshaping our landscape and creating new opportunities. The FINRA report on the regulatory implications of metaverse for the finance sector is a testament to this ongoing evolution.
The Financial Industry Regulatory Authority (FINRA), a non-governmental, self-regulatory organization, recently published a report outlining the potential regulatory implications for securities and finance firms operating in the metaverse.
In addition to providing insights into the present status of financial sector engagement within the metaverse and predictions for its future development, FINRA also emphasized that their regulations and applicable laws governing business practices extend to activities within the metaverse, much like they do in any other context.
Regarding member firms, they should keep in mind the possible effects on their regulatory responsibilities when pondering over integrating the metaverse into their internal operations or employing it within their products.
The metaverse opportunity
According to the findings, the potential earnings from the global metaverse market may hit $800 billion by 2024. It’s projected that this technology could potentially add more than $3 trillion to the total worldwide Gross Domestic Product (GDP) by 2031.
In exploring the potential of metaverse technology, FINRA has examined various possibilities for the financial sector, such as data visualization, digital replicas, and virtual trading. Moreover, it has outlined some obstacles that the metaverse field encounters in general and specifically with regards to financial applications.
One key issue highlighted in the report was prioritizing security and privacy concerns. Given that the concept of “metaverse” encompasses various technological fields, it’s crucial to ensure compliance with financial regulations for platforms used by institutions, brokers, and dealers, to facilitate a seamless adoption process.
In the realm of the metaverse, where numerous business ventures are still in the experimental phase, it’s important to note that these activities remain subject to the same legal rules and regulations as traditional financial transactions. FINRA emphasizes this point.
Per the report:
“FINRA reminds its member firms that FINRA’s rules—which are intended to be technology neutral—and the securities laws more generally, continue to apply if member firms use the metaverse in the course of their businesses, just as they apply when member firms use any other technology or tool. Using any given technology does not absolve firms of their regulatory obligations.”
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2024-10-26 00:43