Is China Ready to Police the Metaverse?

China’s ongoing crypto crackdown could soon extend into the realm of the metaverse and nonfungible tokens (NFTs). 

As CoinTelegraph reported Wednesday (Dec. 1), Gou Wenjun, who directs the People’s Bank of China’s anti-money laundering unit, made comments at a financial security summit that implied more oversight on these two areas. 

Gou said that without regulations, people could use these assets for illegal purposes, such as money laundering and tax evasion. 

Gou spoke of the need to “clarify the division of supervisory responsibilities, improve the transparency of virtual assets, and explore the use of supervisory sandboxes to study and judge the essence and nature of virtual assets.” 

You may also like: Tencent: China Would Welcome Metaverse, With Caveats 

He also said China needs stronger monitoring and analysis of digital asset transactions, with banks and payment services authenticating senders and receivers in crypto transactions, while also boosting the ability to spot suspicious transactions. 

Gou suggested the launch of a digital asset transaction traceability and scene tracking system, which would use technologies such as artificial intelligence and machine learning to identify accounts that transact with questionable addresses. 

Finally, Gou said he is open to financial intelligence agencies forming an international crypto-crime coalition. 

 “The Anti-Money Laundering Center will continue to deepen information sharing and co-investigation cooperation with 60 overseas financial intelligence agencies,” he said. 

Read more: The Metaverse Will Need Its Own INTERPOL to Police Payments Crossing Between Virtual, Real Worlds

PYMNTS explored this issue recently with our interview with Hal Lonas, chief technology officer of Trulioo. While identity checks in the metaverse are so far just theoretical, Lonas said that — due to the intense focus on this sector — money laundering and Know Your Customer issuers will show up soon enough. 

“If you imagine goods and services in the metaverse, businesses that operate in the metaverse will want to make real money and have a real business there,” he said. “That’s where we get to interesting conversations about how that moves back and forth and how we make that traceable, or if it remains untraceable, or what the mechanics of that financial bridge are.”