Banananomics: In-Game Purchase Regulations

The United States Consumer Financial Protection Bureau (CFPB) report states that online video games and virtual worlds are similar to traditional banking but lack federal protections.

Inputs that matter: In its "Banking in video games and virtual worlds" report, released on Thursday, April 4, the consumer protection agency highlights gaming creators who bridge virtual items to reality.

• CFPB Director Rohit Chopra highlighted the increasing trend of Americans converting billions of dollars into digital currencies for gaming.

• With banking and payments shifting to virtual realms, the CFPB said it aims to safeguard consumers from fraud and scams.

The opportunity: The CFPB has shifted its focus toward cryptocurrencies, introducing a proposed rule titled "Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications."

• According to the CFPB, "Gaming assets are stored on a player's accounts and used as a medium of exchange for all sorts of transactions within these worlds, including the purchase of goods and services and person-to-person ("P2P") transfers."

• The report explains that the CFPB "is monitoring markets—regardless of the infrastructure used—where financial products and services may be offered, including video games and virtual worlds."

Zoom in: Most games have their currency for in-game purchases, including:

• Robux is the in-game currency for Roblox.

• V-Bucks is the currency used in the popular game Fortnite.

• Minecraft players can use Minecoins for in-game purchases.

• The currencies are purchased with real money, and there are exchange rates for them. Rates fluctuate, but in July 2023, $10 was equal to around 800 Robux, 1,252 V-Bucks, 1,700 Minecoins, and more than 36,000 PokéCoins.

Between the lines: Unlike cryptocurrencies, these gaming assets are not decentralized and are designed to function only within the gaming platform.

• Gaming companies use behavioral psychology to manipulate users into spending, says Prof Sarah Mills, and the link between gaming and gambling is becoming "increasingly blurred," she explains.

Follow the money: The video game industry generated 197 billion U.S. dollars in 2023, most of that coming from in-game purchases.

• Oslomet reports, "Almost all children and teenagers play video games, making it a crucial social meeting place."

• "There's no sharp distinction between their online and offline world."

Canada's carbon price increase officially took effect on April 1, 2024.

Inputs that matter: The federal carbon price between now and 2030 will have a significant impact on gasoline prices in Canada – these higher carbon taxes could make prices jump as much as 350%.

• The federal excise tax on beer and alcohol will rise by 2%, with a maximum cap of 2% through 2026.

• On average, expect food and consumer goods to see bumps of 0.5 to 2% across the country.

• Natural gas, propane, and other home operating fuels will increase the carbon price by 3 to 5% per cubic meter of natural gas.

The opportunity: The global renewable energy market size was USD$1 trillion in 2023. It is estimated to reach USD$2.5 trillion by 2032, growing at a CAGR of 9.47%.

• Asia-Pacific is the most significant global market shareholder and is anticipated to grow at a CAGR of 8.10% until 2032.

• North America is expected to grow at a CAGR of 8.79% over the same period.

Zoom in: "The federal carbon tax is applied in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, PEI, Newfoundland and Labrador, Yukon and Nunavut. British Columbia and the Northwest Territories have their own (but similar) carbon charges for consumers, while Quebec uses a cap-and-trade system."

• According to the United Nations, fossil fuels, such as coal, oil, and gas, are the most significant contributor to global climate change, accounting for over 75% of global greenhouse gas (GHG) emissions and 90% of carbon dioxide emissions.

Between the lines: In August 1971, U.S. President Richard Nixon announced the suspension of the dollar's convertibility into gold, in effect creating the FOREX market.

• Similarly, the United Nations 2030 agenda created the Carbon market and renewed interest in nuclear power.

Follow the money: Goal 7 of the UN 2023 agenda declares:

• By 2030, ensure universal access to affordable, reliable, and modern energy services

• By 2030, increase substantially the share of renewable energy in the global energy mix

• By 2030, double the global rate of improvement in energy efficiency

• By 2030, enhance international cooperation to facilitate access to clean energy research and technology

GE no longer exists; it is now split into three separate public companies: GE Aerospace (NYSE: GE), GE Vernova (NYSE: GEV), and GE Healthcare (NASDAQ: GEHC).

Inputs that matter: Shareholders of GE common stock received 1 GEV share for every 4 GE shares.

• In its second day of trading, GE Aerospace jumped 6.7%, the biggest gain in the S&P 500.

• GE Vernova, the power business, fell 1.9%.

• Three years ago, GE had to undergo a 1-for-8 reverse split.

The opportunity: Axios declares, "The energy sector's transition away from fossil fuels is one of the global economy's mega-trends."

• "While oil and gas won't be supplanted anytime soon, GE Vernova's debut is critical for alternative and renewable energy."

• "It estimated GEV to be worth around $35 billion (but far less than GE Aerospace's estimated $140 billion valuation)."

Zoom in: GE has sold and divested several of its former subsidiaries since the 2008 financial crisis hammered its finances.

• Twenty years ago, GE was the most valuable company in the world.

Between the lines: CEO Larry Culp stated, "Over the last several years, GE has taken steps to significantly strengthen the business, including more than $100 billion in debt reduction since 2018."

• GE Aerospace (GE) makes 70% of its revenue from skilled services.

Follow the money: GE was bailed out by the U.S. government following the 2008 financial crisis.

• The company notably underperformed the market from 2011 to 2021.