On Friday, June 26, 2009, the Chinese Ministry of Commerce and Ministry of Culture released a joint circular prohibiting the use of virtual currency to trade in real goods and services.  The stated aim of the government’s policy is to reduce the disruption that virtual currency trading may have on China’s real-world currency markets and to curb the use of virtual currency for such illicit activities as money laundering and gambling.  The Chinese government has defined “virtual currency” as any online currency used to recharge, prepay, or purchase points for online game accounts.  This would, presumably, include prepaid game cards and in-game currencies and game points that can be purchased from the game publisher for real money.

Live Gamer supports these measures and their stated goal of cracking down on illegal online activities, such as money laundering and gambling.  Live Gamer also takes a broader stance in opposition to “gold farming,” as well as any other activity that violates a game publisher’s terms of service or infringes upon a game publisher’s intellectual property rights.  The extensive press coverage since the circular was released has resulted in various interpretations of the policy, including headlines suggesting that gold farming is dead in China and perhaps even real-money trading of virtual items in general.  Although we’ll have to wait and see what new information comes to light about this most recent step by the Chinese government to exercise greater control over transactions in the virtual space, it appears to Live Gamer, at least preliminarily, that this most recent step is focused almost exclusively on curbing illegal online activity and attempting to minimize the disruptive impact on real-world currency markets of virtual currency that is purchased by users for real money.

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Laura Brown, senior manager, corporate development, Live Gamer, also contributed to this report.