Been waiting for some guidance from the government on this issue for several years now, ever since Tencent was smacked around by the government regarding QQ Coin related practices. At the time (2003?), the banking regulators were freaking out, worrying that virtual currencies were acting too much like the RMB.

From JLM:

China’s Ministry of Culture (MoC) and Ministry of Commerce (MOFCOM) issued regulations on June 26 to strengthen the supervision of virtual currency in online games, after receiving approval from The People’s Bank of China, reports 163.com. Virtual currency is defined as prepaid cards, prepaid currency and points, but not virtual items, the report said.

Companies already involved in the trade or issue of virtual currency must register with provincial culture departments within three months of the regulation’s release, the report said. Under the regulations, virtual currency issued by one company cannot be used to purchase products or services from another company; and operators may not require real or virtual payment to enter lucky draws or other random selections for virtual currency or items.

In addition, operators: can only accept legally approved currencies for the sale of virtual currency; must keep records for at least 180 days of funds added to and transferred to or from user accounts; should offer related records if disputes occur, and may not offer virtual currency trading services to juveniles, according to the report.

Operators who suspend products or services must inform gamers 60 days in advance and refund un-used virtual currency with legal tender or another method approved by the user, the report said.

The regulation is primarily aimed at virtual currency issued by large online game companies including Tencent (700.HK) and Shanda (Nasdaq:SNDA), in order avoid virtual currency influencing the national financial system, reports Sohu quoting an MoC marketing department chief.

I haven’t seen the regs and probably won’t read them in detail. As the only companies effected by this are large local enterprises (who do not usually hire foreign lawyers like me), I doubt that I will be called upon to opine professionally about the new rules.

That being said, it’s nice to see the regulatory authorities step up and address issues in the new technology area. It’s difficult as a regulator to keep up with this stuff, and you have to feel for the poor bankers at the PBOC or the officials at the Ministry of Culture and Ministry of Commerce who have to deal with tech they’ve probably never heard of before. I do wonder, however, why the MIIT is not involved with this.

Anyway, I appreciate the effort.