Chinese Government Bans RMT

[Deimos]

Not sure that this belongs in this forum, but I figured that it should be posted somewhere. Move if necessary.

InformationWeek: China Bans Gold Farming

Article text in case someone can't access it:

In addition to its ongoing crackdown on Internet porn, the Chinese government has declared that virtual currency cannot be traded for real goods or services.

Virtual currency, as defined by Chinese authorities, includes "prepaid cards of cyber-games," according to a joint release issued by China's Ministry of Culture and Ministry of Commerce on Friday.

"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 services," the Ministries said.

The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146,000.

The ruling is likely to affect many of the more than 300 million Internet users in China, as well as those in other countries involved in virtual currency trading. In the context of online role playing games like World of Warcraft, virtual currency trading is often called gold farming.

The most popular form of virtual currency in China is called "QQ coins," a form of virtual credit issued by Tencent.com.

Tencent.com, which has about 220 million registered users -- about as many as Facebook -- is quoted in the Chinese government news release as "resolutely" supporting the new rule. The government justifies its ban on virtual currency trading as a way to curtail gambling and other illegal online activities.

The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester.

He estimates that between 80% and 85% of gold farmers are based in China.

"[M]any online games have a virtual economy and an in-game currency," he states in his survey. "Gold farmers can play in-game to make some currency. They then sell that for real money -- typically via a Web site and using the PayPal payment system -- to other players of the game."

Game companies typically forbid gold farming but committed virtual currency traders find ways around such rules. Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure.

Not that I expect this to actually stop anything, but maybe it'll slow things down a little.

[Rocl]

Will it blend?

[Darus Grey]

They've done this several times for little effect it just certifies that they'll all go underground(again) and the workers will be treated worse.

Also I don't get how they reconcile this with their courts, considering there's several cases in China that clearly rule on the tangability of virtual goods.

[Blabj]

Just in time for FFXIV.

[Antithesis]

QQ Coins

Hahahahaha.

[_chuchu]

Hahahahaha.

^ @ the QQ coins. How much worse could working conditions be for rmt really?

[Mizango]

Kaythen and Blind will be upset.

[Deimos]

Interesting comment on Slashdot:

In full disclosure: I work in the financial industry currently.

This ban has nothing to do with gaming, gambling, or local economy.

This is likely a direct response to MASSIVE money laundering.

Joe has $100,000 worth of illicit cash.
Joe strikes a deal to buy $100,000 worth of virtual currency in WoW. Joe smuggles the money. (Many times Joe can even hire the kid down the street and pay him cash...)

Joe turns around and over several months sells the gold BACK to the gold farmers and claims the sales as legitimate income. Selling it at a 50% loss he can convert $100,000 into $50,000 of legitimate funds. Even more so when he acts as a virtual broker (IGN anyone?).

While this is a simplified scenario but we are talking BILLIONS of dollars a year are now going through these kinds of channels.

I've seen locally here in the US $300,000 attempts and laundering money this way (through a combination of FF Online, LOTRO, and Maple).

While it is getting easier to deal with this now that the gaming companies are willing to share some data I can only imagine how hard is must be in Asian markets where channeling cash to chinese gold farmers is easier with the shorter phsyical distances. Oddly though, in my experience, I have seen more Korean and Indian gold farmers then Chinese.

Never had a problem with gold farmers, never will, but I have serious doubts that this ban has anything to do with gameplay.

I think this is in response to the forged bonds that were intercepted in Italy. They are worried about organized crime shifting large sums of money (which require laundering) through the virtual economy.

If I am an evil overlord and I have to get 4 billion to my agents around the world the easiest thing to do is buy a billion dollars worth of WoW gold, have all my agents log in with characters. Divvy up the gold then have them sell it off locally or back to the gold farmers at a loss.

No quicker way to distributed that much real world money then through a network of games.

[_chuchu]

Does this also explain the decrease in their advertised prices in the tells I have seen some people say they are getting?

Spoiler: show

inb4 chatmon

[Gergall]

If this law is effective at all, prices will go up and some new non-Chinese RMT groups will spring up in response to the higher prices, ultimately driving them right back to where they were in the first place.

[Ragnell]

Soon they will ban China from the internet completely

[Indalecia]

So where can I find one of these Evil Overlord goons? I hear hes got penny's on the mil of gil.

[Wulfgang]

China's GDP is about to decline by 30%

[LiquidFriend]

Kaythen and Blind will be upset.

Aye. How will Kaythen be able to solicit underage boys for sexual favors now?!?

[Zumi]

I doubt this will do that much for stopping RMT in online games. For example the Chinese government also says selling pirated DVDs and software is illegal. But yet this stuff is still sold all over China.

[Orden]

Aye. How will Kaythen be able to solicit underage boys for sexual favors now?!?

Lulz. It's funny because it is actually completely true.

[Zane]

The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146,000.

The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester.

He estimates that between 80% and 85% of gold farmers are based in China.

Am I the only one that noticed none of those numbers add up?

Either way, Yay for less gil farmers. Yay for higher prices. Yay for hopefully having less of an impact in the infancy of FF XIV.

[Souj]

why would China ban this when it apparently brings in a lot of revenue?

[ringthree]

why would China ban this when it apparently brings in a lot of revenue?

Drugs, prostitution, assassination, on-line poker. Need I go on?

[Silenka]

http://www.little-gamers.com/comics/2005-10-28.jpg