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Mar 25, 2009



Hi Ren,
that's exactly what I thought when I read the rumors last week: If some virtual world provider needs to take an active step to fall under banking regulations nowadays, the ones that do not want to be regulated in future, should opt for steps to build more distinctive boundaries around their worlds when it comes to their virtual currencies. Otherwise the regulators just might try to wipe every VW-good under their regulatory (bank and tax) carpet. As long as the "forex trading" market is only existing in black (not even in grey) markets and in no way supported or tolerated by the provider, regulation regardless of that circumstance would seem disproportional to me.
Well, I have to go now, requesting a line of credit for my Entropia account.


I believe it is common in Sweden for major corporations to found their own bank. For example, in Sweden the global furniture chain Ikea has a "Bank of Ikea" that encourages customers to use an Ikea Bank debit card for their purchases, etc.

As in most countries, Swedish banks are required to have a certain percentage of their overall loaned capital in "reserve" at any time (to cover "runs" on the bank). Notice an important corallary: some of the money "out on loan" does NOT need to be covered in reserve.

This is a huge advantage for a company like MindArk, since it means that don't need to maintain capital reserves equal to the amount of virtual wealth existing in Entropia Universe - all they need to do is maintain the appropriate fraction of the virtual dollars currently issued. This is different from normal corporate governance, where "balancing the books" would (presumably) require that you have sufficient capital to cover ALL your debts (including all the virtual dollars and virtual goods currently in existence). In short, by adopting the guise of a bank, MindArk may be giving itself a license to "print more money", virtually of course.

Bear in mind that this is a personal interpretation. I have no specific knowledge of how MindArk is treating virtual currency and virtual goods on its books as a corporation, or how it will treat them should its bank application be approved.


Interesting view, Arnold.


Great, your example in the above posts also made things easier...
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