China Bans Use of Virtual Currency for Real Goods

News reports have come out that China has both defined ‘virtual currency’ and barred the use of that currency for purchase of real world goods. In theory, this is to combat certain underground uses of vitrual money by limiting their use to the purchase of virtual items. In practice, however, it could prevent the spread of virtual worlds like Second Life into China. Based on the Chinese definition of ‘virtual currency,’ the Linden Dollar used in Second Life is undoubtedly covered, and thus the interplay between the Linden Dollar and real currency would likely be problematic, though the use of Linden Dollars to purchase in-world goods may not be. It will be interesting to see how this continues to play out, especially in view of last year’s finding that a virtual seizure had a real world value in China.

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About Mark Methenitis

Mark Methenitis is an attorney in Dallas Texas. Mark received his Juris Doctorate and his Master of Business Administration from Texas Tech University and his Bachelor of Arts from The University of Texas.

2 Responses to China Bans Use of Virtual Currency for Real Goods

  1. MarcWPhoto says:

    Is gold farming now a violation of Chinese law?

    If so, I project a real winner of a year for sales of WoW in Vietname, the Philippines, India, etc.

    I’ve had arguments about when and how “virtual” money could count as consideration for contract (or, alternatively, for evaluation of a transaction as unlawful gambling.) In WoW, trading real-world < -> cyberworld, either way, is against the TOS, as it is in many other MMORPG. However, my argument is that while the exchange rate may be unofficial and highly variable, at any given time it is not difficult to ascertain how much real gold it takes to buy a set amount of virtual gold, and therefore virtual assets should be considered consideration when used in exchange.

    This may be one secondary reason why most games do not allow the purchase of virtual currency or even items which can easily be exchanged for large amounts of it.

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