China Bans the Use of Cybercash to Purchase Real Stuff - Technologist
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China Bans the Use of Cybercash to Purchase Real Stuff

China's been getting a lot of attention for its actions surrounding the internet these days.  First, there was the requirement (now postponed) that all new PCs come installed with a filtering software known as Green Dam.

Then China shut down Google's website and several of its web applications after accusing the company of facilitating access to pornography.  (C'mon, China, you're just now figuring that out?  That's downright embarrassing.)

Now, China has outlawed the use of virtual money to buy real items.  For example, many stores allow the use of a popular virtual currency, called QQ Coins, to purchase real items or services that are outside the realm of the network that created the currency in the first place.  Such policies now run afoul of the new law.
China seems to feel that the purchase of real world goods and services with virtual money opens up the possibility of illicit, untraceable transactions, money laundering or tax evasion.  Interestingly, the purchase of virtual items (eg, a World of Warcraft sword) with real world yuan is not prohibited.

It's unclear how this new law will affect the gold-farming industry in China.  Gold-farming refers to the practice of playing online games and accumulating large amounts of the game's virtual currency.  Other players who want virtual currency then pay the farmer real money to receive a transfer of the virtual cash. 

It would seem like this practice would be prohibited because the gold farmer is essentially "buying" the real money with the virtual money.  If this is so, it could have a noticeable impact on worldwide gaming economies, since it's estimated that 80-85% of gold-farmers are in China.

Some interesting language in a release by the Ministry of Culture and Ministry of Commerce announcing the new rules seems to suggest that the practice will remain legal, though.  The release, in relevant part, reads:

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 mention of virtual currency trading at a "certain exchange rate" implies that the exchange of virtual money for real money will still be allowed, but it's unclear if that only refers to exchanges that take place within a game or online community, or if people can convert their virtual gold into real money through transactions among individuals.

It will be interesting to see how the new law is enforced.  Many online gamers complain about gold-farming leading to a devaluation of a game or community's virtual currency. 

Maybe the People's Republic just did them a solid.

See Also:
China Limits Use Of Virtual Currency (InformationWeek)
China outlaws virtual currency for real-world items (Ars Technica)