China to ban RMT, maybe.

Thanks to Andy Schwarz for tipping us to this article in Information Week reporting on a Chinese government press release supposedly banning the sale of virtual stuff for real money. In the backchannel, Julian Dibbell reminded us that Korea did the same thing a couple of years back to no effect. No effect because it is hard to do without redesigning the virtual economy, and also because the law's intent was not actually to ban RMT. As we all know, some laws regulating a practice are not really intended to stop it - whatever the preamble might say - but to control it merely.

So: What is China up to?

Comments

[Juho Hamari]

1.

I understood that they are banning the purchases of REAL money and goods with virtual currency. The title of the news article by Informationweek is misleading.

I wrote a brief blog post about this:

http://virtual-economy.org/blog/china_attempting_to_keep_virtu

[Brian 'Psychochild' Green]

2.

They're trying to regulate competing currencies. Tencent's QQ coins were becoming another currency, in effect, with a surprising number of places accepting them as legitimate payment. As I said in the comments of Scott Jenning's blog, this is like the local 7-11 accepting Puzzle Pirate Doubloons to top off your cell phone's prepaid minutes.

The professional economists here can go into the reasons why China is eager to not have a competing currency to the yuan. ;)

[Unggi Yoon]

3.

On the boundary of 'virtual currency' in this new chinese regulation.

Original text:
网游虚拟货币是指由网络游戏运营企业发行，游戏用户使用法定货币按照一定比例直接或间接购买，存在于游戏程序之外，以电子记录方式存储于网络游戏运营企业提供的服务器内，并以特定数字单位表现的一种虚拟兑换工具

网络游戏虚拟货币表现为网络游戏的预付充值卡、预付金额或点数等形式，但不包括游戏活动中获得的游戏道具。根据该规定，网游内的虚拟道具如服饰、游戏币、武器道具等将不属于虚拟货币范畴。

My personal translation:

Online game virtual currency means a virtual exchange means that is

(1) published by online game operationg company,

(2) purchased directly or indirectly with legal tender(yuan) at certain rate.

(3) exist out of/different from game program,

(4) stacked by electronic way in the servers serviced by game company,

(5) represented as specific number of units.

Online game virtual currencies represent pre-paid recharge card,pre-paid amounts or points etc, but does not include items that was gained during game play. According to the provisions, Online game virtual items such as costumes, game coins, weapons etc, will not belong to the virtual currency.

IMHV, the target is not goldfarmers in WoW, but gamblers/money launderes using QQ coins.

[Unggi Yoon]

4.

The source of chinese document on this regualtion.

http://gb.financenews.sina.com/sinacn/000-000-107-115/2009-06-26/01451093939.html

[Isaac]

5.

What's interesting here, to me, is whether or not China fears the use of virtual currency to circumvent its peg to other major world currencies. The relatively minute amount of RMT that takes place annually suggest that this is not an immediate threat, but financial innovation might lead to the creation of some sort of alternative currency, not subject to the normal constraints that governments exert on their national currencies. If this law was created to prevent such innovation, however, I would chalk it up to paranoia rather than good, common-sense central concentration of economic and political power. As an anti-vice law (either against gambling or money laundering), it seems rather more draconian than necessary.