Tobold's Blog
Wednesday, July 01, 2009
 
China stops trade in virtual currency

This Monday the Ministry of Commerce of the People's Republic of China announced a prohibition of use of virtual money for trading in real goods. Note the order of the words! Of course this also prohibits the use of real money for trading in virtual currency, because real money is a real good. But the order of the words tells you that this isn't done because China is worried that their gold farmers might ruin World of Warcraft. The intention is a very different one, which they clearly state:
China has unveiled the first official rule on the use of virtual currency in the trade of real goods and services to limit its possible impact on the real financial system.
The intention is to prevent activities like money laundering via a transfer and back into virtual currency. But whatever the intentions are, it remains to be seen how this will actually be formulated into law, and what activities it affects. Will Chinese gold farmers playing on US servers of WoW become extinct, or at least driven underground?

One tricky part is the sales of virtual goods that aren't currency for real money. In the wording of the press release that appears not to be affected. But of course one could launder money not only buy buying virtual gold with it, but also by buying and reselling virtual epics or trade goods. But if you prohibit that, then the microtransaction business model also becomes illegal in China, and it is far more widespread there than in the US or Europe.

Even more interesting is the potential effect of this on future game design. It is possible that the Chinese government will hold game companies responsible to completely stop RMT. That is easier than you might think. You just need to completely eliminate the player economy and all forms of trade. For example in World of Warcraft you would need to eliminate the auction house, mailboxes, and direct trades. Then you'd better remove the current limit of 2 tradeskills, because everybody will need to be able to do everything, when there is no trade possible. You would also have to remove the shared guild banks, but could add shared banks limited to the characters on the same account, so people could still pass trade goods and heirloom items between alts. Of course that would be a rather significant change to World of Warcraft, but it would still be very playable like that. And as the goal here is to prevent harm to the greater financial system, I doubt that the Chinese government is too worried about the effect of that on game balance. We might even see games without player economy here in Europe and the US, if the game company wants to sell the same game everywhere.
Comments:
Not entirely correct, RMT is not banned, just the working conditions for the farmers.

The gold farmer employees can no longer sell their ingame gold directly to their employer, they will have to be paid wages like a normal employee.

Basically, the chinese government wants the tax and actually almost legalized RMT this way.
 
Where do you get that interpretation from, Longasc? To me the source quoted is pretty clear: "Under the new rules, using virtual money for gambling will be punished by public security authorities, and minors may not buy virtual money. The Ministry of Culture also vowed to step up supervision on money laundering via virtual credits and other illegal online activities."

Nothing to do with working conditions for gold farmers. Who as far as I know are already paid hourly wages, but have minimum quotas to fulfil.
 
Interesting read, bit over the top in your future outlook maybe. I'd go with Longasc's interpretation. Seems also in line with is currently being voiced in the consulting/auditing firms (taxing virtual transactions).

P.s. I think that with working conditions Longasc means the conditions in which the farmers who are selling will need to operate in the china under these (yet to be) new rules. Not acutally the working condition of the actual people.
 
The way I understood it, they want to make sure that games with RMT are literal money sinks: Real money can only go into a game, it cannot come out. In that sense, it's quite similar to what CCP, Microsoft and Nintendo (among others) have in place: You can use real money to buy virtual currency from the company (or get it in-game), but you cannot sell that virtual currency.
 
http://www.informationweek.com/news/internet/ebusiness/showArticle.jhtml?articleID=218101859

"A report in the English-language China Daily says that in-game gear is not considered virtual currency, so selling virtual items can be expected to continue." ...and so on.

Also read the editor's note:
"Editor's note: The former headline, China Bans Gold Farming, was changed because it incorrectly extended the scope of the new regulations to all virtual currency exchanges. The new rules limit official game currencies sold by game operators, but not "virtual network props such as costumes, games, coins, weapons and other props."

DeSlisser is right about the "working conditions", I meant it that way, sorry for the confusion.
 
Removing the auction house, trade and mail attachments is not enough. You also would have to remove any kind of loot. Otherwise anyone could pay real money to a guild to be taken to a raid and get epics ;).
 
The law doesn't exempt games that allow RMT. Apparently you can only pay the game companies but not 3rd parties for in game currency. It also explicitely mentions game time cards, which reminds me of the Eve cards that effectively amount to RMT.

Why do they even have this law? Why does a government want to even get involved in games? (Yeah I know governments can't help themselves they think they can fix everything)

I know they say it's to stop gambling.

the libertarian in me dies a little each day.
 
I don't understand how you jump from "you cannot buy virtual currency with real-world currency unless through the issuer of the virtual currency" to "we have to get rid of in-game trade."
 
I don't understand how you jump from "you cannot buy virtual currency with real-world currency unless through the issuer of the virtual currency" to "we have to get rid of in-game trade."

It's not "we" have to get rid of ingame trade, but the possibility exists that if buying gold is actually illegal, and seen as money laundering etc., the game companies would be forced to eliminate it. Completely, not just saying "don't do it" in the EULA and then banning a few botters.
 
I don't know the MMORPG sector well at all. Can someone tell me whether this new regulation is likely to be negative or positive for Tencent, and why?

Thanks,
 
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