Tuesday, July 17, 2007

CHINA BANS THE USE OF VIRTUAL MONEY IN REAL-WORLD TRANSACTIONS

China’s government has promulgated a new policy banning the use of “virtual money” from online games to buy real-world products. According to a government notice/order, there must be a “strict differentiation between virtual exchanges and online commerce in material products.” It further states that virtual currency can only be used to purchase virtual products and services, and users are forbidden from exchanging virtual money for real money for a profit.
The notice also provides that the People's Bank of China will "strengthen management of the virtual currencies used in online games and will stay on the lookout for any assault by such virtual currencies on the real economic and financial order.” Policy analysts are pointing at the popular Hong Kong-based online game provider Tencent, which issues virtual "QQ Coins" through its games, as one of the impelling forces behind this new policy. This company’s games have become very popular in China, and its QQ Coins have been accepted as payment by other businesses and have been exchanged for legal tender.

While it may seem that the Chinese government is over-reacting because the use of the QQ Coins seems to be an ordinary barter, this trend/ practice was probably perceived by them as a potential mode of “money laundering” or even perhaps a venue to evade taxes.

Source: http://shorl.com/brusihokibetre (GameSpot) and at: http://shorl.com/preganokebrobro (Financial Times)

1 comment:

emerson banez said...

but when you think about it, what's so "real" about "real money" in the first place?.

the power to assign value to arbitray units of exchange is one of the oldest government rackets. controlling the money supply is a way for governments to maintain some control over the economy.

since it's all virtual anyway (with only the medium being tangible), any government should certainly be nervous about virtual currency....