Cryptoassets in the Metaverse Represent a Systemic Risk

An open and decentralized metaverse, which is likely to become a reality at some point in the future, implies some way of owning and transacting using digital objects that are interoperable between virtual worlds. Currently, cryptoassets are well placed to take this role. If an open metaverse takes off, households and corporates are likely to hold greater and greater shares of wealth in cryptoassets. But this will expose them to larger risks. In fact, a successful open metaverse could expose us to a systemic risk that could have large-scale impact on employment, the value of traditional assets and more. Therefore, it is important that regulators address risks associated with cryptoasset use in a metaverse well before it reaches any sort of systemic status.