The Digital Chamber
1667 K Street NW, Suite 640
Washington, DC 20006
October 24th, FINRA published a report entitled The Metaverse and the Implications for the Securities Industry. It highlighted market trends in metaverse activity, signaling potential revenue opportunities for FINRA members looking to leverage aspects of metaverse technology, while addressing potential use cases, challenges, and potential regulatory considerations for FINRA members.
Opportunities
The report is generally friendly toward the development of metaverse technologies, activities, and markets. It highlights numerous statistics that suggest that metaverse activity, led by gaming and e-commerce, is quickly picking up, has strong use cases for the financial industry, and will have large implications for the global economy. Sources cited by FINRA estimate that global metaverse revenue could approach $800 billion in 2024 and that the metaverse is expected to contribute over $3 trillion dollars to global GDP by 2031.
The report states that a segment of financial institutions, including broker dealers, are already actively experimenting with incorporating the metaverse and its immersive technologies for a range of activities including, internal training and staff development, data visualization (e.g., for investor pitches), virtual trading, payments, investor education, and customer solicitation and service.
Challenges
The report also highlights challenges that may impede the immediate use of the metaverse for regulated activities, including resource constraints, data privacy and protection, cybersecurity and interoperability. FINRA also advises member firms to be mindful of the potential implications for their regulatory obligations as they consider whether to incorporate metaverse technology into their businesses. FINRA notes the report does not provide an “exhaustive or cumulative list of all factors or regulatory issues associated with the metaverse” the report and that it “does not create any new legal or regulatory requirements or new interpretations of existing requirements.”
What does this signal?
The report is an important first step in a dialogue between FINRA and member firms on the possibilities and challenges inherent in incorporating innovative and transformational metaverse technology into traditional regulated financial services business models. Through the report, FINRA’s Office of Financial Innovation has indicated a depth of understanding of the potential of metaverse technology for member firms and a willingness to engage with a broad variety of market participants that is very positive overall.
Next steps
FINRA has requested comments on the report, particularly from financial industry market participants who are currently exploring metaverse technology or have identified other use cases in the securities industry. To that end, TDC will be creating a Metaverse workstream to gather member input and insights on opportunities for use of metaverse technology by financial services companies. The Workstream will create and submit public comments to FINRA by the March 14th, 2025 comment deadline.
To join the Workstream, please reach out to Jonathan Rufrano at Jonathan@digitalchamber.org