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China Bans Gold Farming: Notoriously Controlling, Yet Forward Thinking?

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June 30, 2009 |

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The Chinese Ministries of Culture and Commerce announced on Monday that the trading of virtual currency for real world cash is to be banned outright, in the name of reducing illegal gambling and money laundering. From the press release:

“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.”

There’s a million different takes on this story, most of which I can empathise with. For one, the capitalist in me says if people want to sell legal possessions to one another they should be allowed to. While some games (WoW for example) actively try to prevent gold farming, others actively encourage it (eg Second Life), and the latter can only suffer for losing China’s 300 million potential customers. What’s more, with an estimated $300+ million being generated in revenue in China alone, is this really a dangerous trade the country should be looking to abolish?

On the flip side, gold farmers can ruin a game’s economy and encourage sweatshop-type labour. With some sources claiming more than 80% of gold farming originates in China, this move could have a sweeping effect on MMOs in general.

But for me the real point here is that the Chinese government actually understands what gold farming is. In the UK, the decision to go with PEGI as opposed to the BBFC for official age ratings was surprisingly insightful – ask your average MP what virtual currency is, or why it’s dangerous, and I think he might struggle somewhat more.

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  • http://en-gb.facebook.com/people/Nicholas-Lovell/739651170 Nicholas Lovell

    I believe, although I may be wrong on this, that China was worrying about the impact on its own real economy of their being freely-tradeable currencies that were not under state control. In other words, if people started buying goods from each other in exchange for, for example, Linden dollars, then the Chinese government would have lost control of the money supply, one of the two core levers governments can use to directly impact the economy.

    I'm not sure that they were right, but it shows that they were worried about virtual currencies getting so big that they threaten the renminbi in the real world.

    [Reply]

  • http://en-gb.facebook.com/people/Nicholas-Lovell/739651170 Nicholas Lovell

    I believe, although I may be wrong on this, that China was worrying about the impact on its own real economy of their being freely-tradeable currencies that were not under state control. In other words, if people started buying goods from each other in exchange for, for example, Linden dollars, then the Chinese government would have lost control of the money supply, one of the two core levers governments can use to directly impact the economy.

    I'm not sure that they were right, but it shows that they were worried about virtual currencies getting so big that they threaten the renminbi in the real world.

    [Reply]

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