Wednesday, March 7, 2007

China cracks down on “virtual money”

by Elaine Frei

China has instituted new restrictions on the use of “virtual money” earned or won playing internet games.  A notice was issued in February that calls for “strict differentiation” between virtual commerce and online commerce in actual, material products.  Under the rules, virtual money can only be used to purchase virtual products and services provided by the companies that issue the money.  Issueance of virtual money will be limited, as well, and users may not trade virtual money into real money for profit.

The notice issued by the government also said that the People’s Bank of China has been charged with managing online currencies and making sure that virtual currencies don’t threaten the material economic order.  This highlights one of the Chinese government’s concerns about virtual money, that it could threaten real-world finance.  The other concern is that virtual money is being used to skirt China’s gambling prohibitions.

The new rules concerning virtual money are just one of the measures China has taken recently to regulate and “purify” the internet.  It has also recently decreed that no new internet cafes will be allowed to open this year, and minors have been banned from the approximately 113,000 internet cafes currently operating in the Asian nation.  Café operators who do not follow the rules are assessed costly fines.

 

 

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