China have made the first move in regulating the use of virtual currency – by effectively outlawing a common form of gold farming. A joint release from China’s Ministry of Culture and Ministry of Commerce reveals the country has now forbidden the act of trading virtual currency for real-world goods or services.
With nearly 300 million internet users in China, this ban is expected to impact a decent-sized chunk of the population – and it’s all because of the potential impact that virtual currency could have on the country’s real financial system.
The release explains:
“The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services.”
The virtual money trade in China topped several billion yuan last year, enjoying an increase of roughly 20 percent annually – and this is something which has unsurprisingly garnered the government’s attention since 2007.
A primary concern for the Ministry has been the gambling and illicit trade that takes place through virtual currencies, resulting in a promise to step up supervision on money laundering and other illegal online activities. One of these illegal activities is gambling, outlawed in China for more than 50 years. Under the new ruling, using virtual money for gambling will now be punished by public security authorities. The purchase of virtual money has also been restricted, with minors now not allowed to hand over their pocket money for QQ coins.
that’s right, QQ coins are the most popular Chinese online credits, with approximately 220 million registered users. In a recent media statement, QQ coins’ parent company, Tencent, announced they “resolutely” support the new rule. Tencent have strongly opposed underground virtual money trading, and promise towork with the authorities to help combat online crimes.
According to an expert on the Chinese online industry, the current level of online trading is still too small to have any serious impact on the nation’s real-world financial system, but the rate of growth in the industry suggests that problems are just around the corner. The Chinese government are just getting in early, trying to “nip illegal online activities in the bud” – and cutting off the livelihood of many starving students in the process. (Current estimates put 80% – 85% of all gold farmers within China’s borders, and the virtual currency/real-world cash trade generates between US$200 million and US$1 billion annually.)
However! In-game gear is not “virtual currency”, so (according to Chinese law) you can still sell those and get some real-world cash, if you so desire. Whether or not the game sees it the same way is a whole ‘nother kettle of fish.
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