Internet & Social Media Law Blog
According to a report from Global Times, the Ministry of Culture (MOC) issued an explanation on new rules which prevent gaming-related virtual currencies such as Tencent’s Q-bucks from entering into circulation as real money. According to the report, the rules were released on June 3, 2010 and will go into effect in August. The regulations are intended to protect kids from fraud or other issues that might arise with virtual currencies. Additionally, anyone who issues or trades virtual currency must apply for a license.
This is not the first time China has been on the leading edge of virtual currency related issues. For example, in November 2008, we reported that China was one of the first countries issuing guidance on the taxation of virtual transactions.
The requirement to have a license to issue or trade virtual currencies is not unique to China. Similar laws apply in the US. But as the use and dollar volume of virtual currency transactions increases, so too will the regulation and the enforcement of existing regulations.
If you are issuing or trading virtual currencies, it is important to understand the legal ramifications and requirements.