Marbridge Daily

June 26, 2009

China Regulates Virtual Currency Market

Sohu IT, 6/26/09

China's Ministry of Culture and Ministry of Commerce have jointly laid out regulations to further strengthen supervision of the online gaming virtual currency market. The two national ministries have issued restrictions that prohibit virtual currency from being exchanged for any real goods or services, in order to prevent virtual currencies from disrupting real currency markets. The new regulations are also meant to address the issues of insufficient protection of the rights and interests of users, inadequate monitoring of market behavior, and an increase in the number of disputes related to online game virtual currency.

According to the ministries, virtual currency is defined as any online currency used to recharge, prepay or purchase points for online game accounts, but does not encompass virtual items earned within the game world itself.

The new regulations stipulate that:

1. No company that issues virtual currency shall be allowed to operate a platform facilitating trades of virtual currency between users, and no company operating a virtual currency trading platform shall be allowed to issue virtual currency.

2. Businesses already engaged in the provision of online game virtual currency issuing or trading platform services must, within three months from the promulgation date of this notice, must apply with the relevant cultural administration authorities. Those firms failing to apply by the deadline will be investigated.

3. Companies wishing to provide online game virtual currency issuing services must include in their application to provide such services a business development report that details the form in which virtual currency will be issued, the range of distribution, the unit purchase price, provisions for refunds in the event of termination of service, the means by which users will be able to purchase the virtual currency (i.e. cash, bank card, online payment, etc.), provisions for safeguarding the rights of users, and provisions for ensuring security.

4. Companies wishing to provide online game virtual currency trading platform services must comply with the relevant rules governing e-commerce platform service provision, and must include in their application to provide such services a development report which details the model for the exchange service, the means by which users will be able to purchase the virtual currency (i.e. cash, bank card, online payment, etc.), provisions for safeguarding the rights of users, user account numbers and account information on the real name bank account to which the virtual account is bound, and provisions for ensuring security.

5. Online game operators shall be required to submit a quarterly report to the provincial level cultural administration authorities, based on the province in which their business is located, detailing the total amount outstanding of virtual currency they have issued.

6. Online game operators shall be allowed to issue virtual currency to users only in exchange for legal tender, and shall, for a period of 180 days after each purchase, maintain a record of the purchase.

7. Online game virtual currency may be used only to purchase services or virtual items from the company which issued the virtual currency; it may not be used to purchase physical goods or to purchase services or virtual items from any company other than the original issuer.

8. Online game operators wishing to terminate their products or services must provide 60 days advance notice. At the time service is terminated, the game operator must refund each user';s unused balance of virtual currency, using either legal tender or some other method that has been agreed upon by the user. Suspension of online game service by the operator for over 30 days, whether due to suspension of a user';s access, technical malfunction of the operator';s network, or any other reason originating from the operator shall be regarded as termination of service.

9. Online game operators, being separate from online game virtual currency trading platform providers, must implement technological constraints to prevent the transfer of virtual currency between user accounts.

10. Online game virtual currency trading service enterprises, when providing service, must require each user to register using a valid identification card and must have the user bind his virtual currency account with the real name information from a real bank account. The virtual currency trading service provider must also keep a record of the relevant account information for each virtual currency trade between users, and must keep each such record for a period of 180 days.

11. Online game virtual currency trading platform providers shall not be allowed to offer such services to minors.

Editor's Note: Please note that the above is only a partial summary of the new regulations. Readers wishing to purchase a full translation, please contact us at .

 

Keywords:  Internet  Ministry of Commerce  Ministry of Culture  online gaming  virtual currency  virtual items  regulation 

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