FINRA published today a new report, The Metaverse and the Implications for the Securities Industry.
The report is intended to raise awareness among FINRA member firms and the broader securities industry by providing an overview of how developments related to the metaverse may impact business models and processes. While the true implications of the metaverse may not be known for years, the report analyzes potential applications, use cases and challenges for member firms and notes certain regulatory considerations.
The report notes that the metaverse includes virtual worlds that are immersive, interactive and may be experienced in new ways through technological developments in hardware and software. While the gaming industry has long been active in the metaverse, the report highlights that financial institutions have increasingly been exploring the metaverse to engage with the next generation of customers and to enhance their operations.
“A segment of financial institutions, including broker-dealers, are actively experimenting with incorporating the metaverse and its immersive technologies,” according to the report. These developments prompted FINRA’s Office of Financial Innovation (OFI), which is part of the Office of Regulatory, Economics and Market Analysis, to launch the research initiative.
“While we are already seeing the metaverse being used and experimented with in a number of ways by financial institutions, it is an evolving technology with both potential benefits and risks that need to be better understood,” said Haimera Workie, Vice President and Head of OFI at FINRA. “We look forward to continuing to have an open dialogue with industry stakeholders to better understand the impact the metaverse could have on FINRA members and investors.”
Use Cases
The report expands on the following potential metaverse-related use cases that FINRA members and related financial markets are considering or exploring:
- Data visualization
- Virtual trading
- Digital twins and industrial metaverse
- Payments
- Training and collaboration
- Investor education
- Customer solicitation and service
Potential Challenges
The report also delves into the challenges that firms may wish to consider as they explore applications on the metaverse or implement a metaverse strategy, including resource needs, data privacy and protection, and cybersecurity.
Regulatory Considerations
The report notes that member firms should also be mindful of the potential implications to their regulatory obligations as they consider whether to incorporate the metaverse into their internal systems and processes or use this technology within product offerings.
The specific rules applicable to member firms’ use of the metaverse will vary but will ultimately depend on how member firms deploy the technology, the report says. FINRA’s rules, which are intended to be technology neutral, 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.
This report is not intended to provide an exhaustive or cumulative list of all factors or regulatory issues associated with the metaverse and related technologies. Moreover, this report does not create any new legal or regulatory requirements or new interpretations of existing requirements, nor does it relieve firms of any existing obligations under federal securities laws and regulations.
Seeking Comments
FINRA is seeking comments from firms, market participants and others currently exploring the metaverse. Comments are requested by March 15, 2025. More information about the request for comments is contained in the report. FINRA will continue to engage with market participants and welcome input after the comment period.
About FINRA
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. FINRA regulates one critical part of the securities industry—member brokerage firms doing business in the U.S. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.
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