Should the federal government regulate virtual currencies as if they were home loans, bank accounts or other consumer financial products?
That question popped up this week in a comment letter the American Bankers Association, or ABA, submitted to the Consumer Financial Protection Bureau, or CFPB. The letter expressed the Washington, D.C.-based trade association's views about the federal agency's effort to sort out which larger non-bank consumer financial product companies will be subject to its oversight.
The issue wasn't mentioned in the CFPB request for comment published in the Federal Register. But in a few sentences, the ABA suggested that virtual currencies should be part of the CFPB supervisory responsibilities, basing that argument in part on the fact that virtual currencies reportedly have been used to pay developers of these applications and that the use of such currencies "can be expected to expand even further."
Virtual currencies are used for commerce within online games and virtual worlds. Participants can spend the currency, usually points or credits, to buy virtual properties, avatars, products, services or, more often, special abilities and privileges that might give them a competitive advantage or greater enjoyment of the activity. In some cases, virtual currency earned online can be bought and sold elsewhere in real-world dollars, though this trading may be prohibited by the game or world publisher.
It's conceivable that virtual currency could be used for financial mischief or fraud, especially since these points or credits can be purchased with real-world money and escape the game or virtual world within which they were created and earned. But does that mean the CFPB should look into virtual currencies? Or are consumers well enough protected by other laws and the rules of the games and worlds themselves?
What's your opinion?
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