According to a joint release from China’s Ministry of Culture and Ministry of Commerce this past Friday, virtual currency (as well as “prepaid cards of cyber-games”) may no longer be legally traded for real goods or services.
The official statement from the Ministries states: “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.”
This decision, possibly influenced by the recent case in which virtual currency extortion led to three years of prison, is expected to affect millions of people in China who make part or all of their living through such means. Dubbed “gold farming” by many, a vast number of companies hire people to play MMOs for the sole purpose of collecting large sums of virtual currency and selling them to other players. In turn, however, those “farmers” inflate and usually adversely affect in game economies. While this is a significant win for many game companies that fight against these services, the reasoning behind the ban is not necessarily because of their complaints, according to the Chinese government.
The primary justification, as stated by the government, is that this will curb (at least to some degree) illegal online activities such as gambling. Unfortunately, this approach will put many Chinese citizens out of work. While the virtual currency trade industry is global, an estimated 80-85% of gold farming companies stem from China. In fact, last year, the industry totaled over one billion yuan or around $150 million within the country.
Of the game companies and platforms that provide virtual currencies for their players, Tencent.com has been affected the most. Its virtual currency, QQ Coins, has been the most popular online currency to be traded by these industries. With 220 million registered users, it is not hard to see why. Suffice to say, such companies have openly supported the new ruling.
How exactly the ruling play out depends on the extent to which the Chinese government will apply the new ban. It is doubtful that this will snub out gold farming and selling completely, but it is certainly going to drop it in droves.