China bans virtual cash for real-world trade
Peer-to-peer transactions only
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Officials in China are banning use of virtual money to buy real-world goods and services.
Under new regulations released jointly by the Ministry of Commerce and the Ministry of Culture, virtual currency can now only be used for virtual goods and services that are provided by the issuer of the virtual currency.
Several sites are reporting the news as targeting China's online gold-farming market, but there is no indication that selling virtual currency is being forbidden.
The new regulations do define prepaid cards for video games - but according to the Ministry of Commerce, the rules are to limit the impact of virtual money on the country's real financial system.
Those caught using virtual money for gambling will also be punished by public security authorities, the Ministry said. The Ministry of Culture added it will step up supervision of of money laundering using virtual money and "other illegal online activities."
Virtual money has been fingered as a source of under-the-table payments, laundering, theft and fraud by China's government. In particular are "QQ coins" issued by Tencent.com, one of the country's top internet community operators with over 220 million users.
China's government-run media outlet Xinhua explains in a 2006 report that QQ coins were originally intended to be used to buy Tencent.com services such as electronic greeting cards, avatars, virtual game chips, and Tencent software. But many users began trading the currency amongst themselves and in exchange for other goods and services - and more worrying for China's government - real yuan.
The practice had apparently become so widespread and publicized, some regulatory officials began worrying it could challenge the legitimate currency of China. Xinhua claims trade in virtual currency exceeded several billion yuan last year and increases at an average rate of 15 to 20 per cent annually.
The occasional real-world slaying over virtual goods couldn't have helped either.
In a statement following the decree, Tencent said it supported the new rule and would work with authorities to combat online crimes. ®
COMMENTS
@AC AC re. virtual currencies
Paypal is a payment management system that does not issue 'currency' and e-gold is an investment system that allows you to buy/sell gold investments but does not issue a currency. They are supposed to operate under various government guidelines for customer background checking to avoid being used as a money laundering channel.
Games like Second Life operate an in-game token system where tokens can be bought and sold by the game operator for real world currency. Tokens are exchanged between players as part of game activity and also between players and the game operator for game services. I know that SL players will say that it's not a game but as far as the money flow is concerned, it operates as a game of skill where you can win money from other players where the money is in the form of tokens issued by the game operator.
These tokens can be freely transferred between players but can never be taken outside the game and so do not count as currency. It is possible to use SL for money laundering but SL places limits on transaction levels and operates a distinction between 'ordinary' accounts and 'merchant' accounts, with transaction limits to detect and prevent this.
A debit card is a tool, under the control of the banks, that enables money in your bank account to be transferred to someone else's bank account under your instructions, so it's nowhere near being a currency. A gift certificate or shop voucher, which is issued by a retailer organisation, is in fact a form of currency (technically) but it is time limited for redemption and there are not many people who would be happy to accept a shop voucher as payment for goods/services; so as such it is useless as a currency.
The problem with 'alternative currencies' as far as governments are concerned, is the possibility of money laundering and forgery. The 'official' banking system has many procedures and checks in place to detect and prevent this but any alternative currency or virtual currency would probably not have this high level of oversight due to the cost of setting up and maintaining it.
Not true
I thought WoW is included and it's a good thing that I read an article which clearly explained that China is after the banning of QQ coins. As a gamer, I was alarmed about this news and I was relieved when I read this article that WoW is not included. Might as well share it with you:
http://www.wowgoldfacts.com/2009/07/06/the-story-behind-the-chinese-brouhaha-lost-in-translation-indeed/
Dont think so
I do not see this happening… Seeing as how the chinese gold farming operations work, it is nearly impossible for China to pull this off. Sites such as www.MOGS.com are USA based and the games they sell are USA based, granted a majority of the supply there is from players in the USA some comes from China gold farms… if China is going to ban they are going to focus on domestic games to China, however the level of corruption in China at a local level is insane so for the State wide government to do this they have to get through the corrupt local government… All I can say is good luck!
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