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In this paper, Chappuis Halder offers an understanding of the Metaverse and the possibilities it presents for Financial Institutions. The different technologies that the Metaverse requires are maturing: so much so that they have enabled the creation of this unique environment. The Metaverse is here - a reality - and so is the disruption that it presents.

"How could an immersive computer-generated environment ("the metaverse") impact services in the digital economy? Investment in virtual worlds has grown rapidly. Yet the technology still falls short of achieving fully immersive experiences. And despite hyperbolic predictions, various indicators show interest has fallen in the last two years. While some use cases show promise (eg gaming, education, healthcare), others seem distinctly gimmicky (eg virtual bank branches, land speculation). If the metaverse does succeed, it could mean: (i) a blurring of lines between the tradable and non-tradable sectors, (ii) greater cross-border economic integration and (iii) new demands on payment services. In principle, retail fast payment systems, retail central bank digital currencies or tokenised deposits could be designed to support services in the metaverse. To prevent virtual environments and money from becoming fragmented and dominated by powerful private firms, public policy would need to support efficient, interoperable payments and provide clear standards on data privacy, digital ownership and consumer protection."

"Technology alone will not pave the way for true ownership of digital assets in the metaverse. NFTs cannot bypass the centralized control that metaverse platforms currently have and will continue to have under their contractual terms of service. Ultimately, legal reform alongside technological innovation is needed before the metaverse can mature into what it promises to become."

In July 2024, DeCurret plans to commercialize its DCJPY tokenized deposit network of over 100 Japanese institutions and enterprises that have explored proofs of concept (PoCs) for various use cases. DeCurret outlined several consumer oriented use cases, including retail in-store usage, to buy non fungible tokens (NFTs), and consumer carbon credits. All of them have programmable money elements. The DCJPY platform envisages a financial zone where banks issue deposit tokens and the money transfers take place, and separate distributed ledger technology (DLT) business zone networks (e.g., a metaverse zone, an NFT zone and an environmental value zone).

"Non-fungible tokens (NFTs) have been widely adopted by the sports, arts, music, gaming, fashion, and other industries. Behind the hype is a fast-developing ecosystem of technical and commercial innovation that is embracing the promise of bridging physical world concepts of uniqueness and scarcity with the digital world. The NFT market has seen enormous growth in recent years, with sales of NFTs reaching $25 billion in 2021 by one estimate, and this is only expected to grow as creators and brands craft their plans for the metaverse in which NFTs are expected to play a critical role...."

Chris Brummer draws from his recent white paper on disclosure and decentralized finance (DeFi), to introduce some new concepts to the DeFi lexicon for building out disclosure delivery systems native to the crypto ecosystem. He imagines disclosure systems that are programmable, capable of evolving with technology - and which could provide the infrastructure for further tools for empowering participants in the Metaverse and beyond. If properly developed, the ideas could draw on DeFi's strengths and provide more functionality and security than regulators' legacy technology stack. Moreover, they could afford a new generation of developers and engineers a unique opportunity to reorient disclosure towards its original purpose: to be read.

Regulation 2022/858 of the European Parliament and of the Council on a pilot regime for market infrastructures based on distributed ledger technology (DLT) was published in the Official Journal of the European Union. Tokenization is expected to open up opportunities for efficiency improvements in trading and post-trading processes, but EU financial services legislation was not designed with such technology and crypto-assets in mind and contains provisions that could limit the use of blockchain technology. For these reasons, the DLT Pilot Regime is being introduced to allow for such technology to flourish, while accounting for potential risks at the same time.