China Cracks Down On Virtual Currency

In its latest move to control the internet the Chinese government has announced new restrictions on the use of virtual currencies. The most popular of these currencies in China is the QQ Coin. QQ Coins are issued by tencent.com which has over 220 registered users.

A joint statement by the Ministries of Culture and Commerce sets out a definition of virtual currencies and says:

The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and service

The move is apparently a pre-emptive attempt to stop trading in virtual currencies from one day having a destabilising effect on China’s real world economy. If that threat is as real as the Chinese economists apparently imagine then I wouldn’t be surprised if Western governments follow suit sooner or later.

Gold Farmers

Many people in China work as gold farmers, building up huge stocks of virtual currency such as World of Warcraft WoW gold and then selling internationally for real money. What effect will the new rules have on gold farmers?

The situation is confused. Initial reports says that gold farming would be outlawed. However some people are now suggesting that this may not be the case. The new law restricts the use of virtual currency to buy real world goods – not necessarily the sale of virtual currency.

If that reading is correct then it’s a smart move by the Chinese government – it would be foolish to destroy an industry that, although virtual, earns real cash for the country’s economy.