China bans use of virtual cash for trade in the wider economy
30 June 2009 | 12494 views | 0
China has banned the use of virtual currency in the trade of real goods and services in a bid to limit its possible impact on the financial system.
In a joint circular from the Ministry of Culture and the Ministry of Commerce, the government stated: "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 Chinese government and financial regulators have become increasingly concerned about the transfer of virtual currency - typically earned in online gaming - into the physical economy. According to some estimates, trade in virtual money topped several billion yuan last year after rising around 20% annually.
The most popular Chinese online credits are "QQ coins" issued by Tencent. com, which has at least 220 million registered users. In a media statement Saturday, the company said it "resolutely" supported the new rule and that it would step up its opposition to the booming underground trade in QC coins.
Under the new rules, using virtual money for gambling will be punished by public security authorities, and minors may not buy virtual money.
The Ministry of Culture also vowed to step up supervision on the use of virtual credits in money laundering.