Chinese Government Bans Gold Farming

QQ CoinsAccording to a joint release from China’s Ministry of Culture and Ministry of Commerce this past Friday, virtual currency (as well as “prepaid cards of cyber-games”) may no longer be legally traded for real goods or services.

The official statement from the Ministries states: “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.”

This decision, possibly influenced by the recent case in which virtual currency extortion led to three years of prison, is expected to affect millions of people in China who make part or all of their living through such means. Dubbed “gold farming” by many, a vast number of companies hire people to play MMOs for the sole purpose of collecting large sums of virtual currency and selling them to other players. In turn, however, those “farmers” inflate and usually adversely affect in game economies. While this is a significant win for many game companies that fight against these services, the reasoning behind the ban is not necessarily because of their complaints, according to the Chinese government.

The primary justification, as stated by the government, is that this will curb (at least to some degree) illegal online activities such as gambling. Unfortunately, this approach will put many Chinese citizens out of work. While the virtual currency trade industry is global, an estimated 80-85% of gold farming companies stem from China. In fact, last year, the industry totaled over one billion yuan or around $150 million within the country.

Of the game companies and platforms that provide virtual currencies for their players, Tencent.com has been affected the most. Its virtual currency, QQ Coins, has been the most popular online currency to be traded by these industries. With 220 million registered users, it is not hard to see why. Suffice to say, such companies have openly supported the new ruling.

How exactly the ruling play out depends on the extent to which the Chinese government will apply the new ban. It is doubtful that this will snub out gold farming and selling completely, but it is certainly going to drop it in droves.

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5 Responses to “Chinese Government Bans Gold Farming”

  1. Matt Mihaly says:

    There are ‘only’ about 300 million internet users in China. There are certainly not 300 million people making all or part of their living from gold farming. (Which this law isn’t really about anyway. It’s about shutting down the use of QQ coins as an alternative to the Yuan.)

  2. Shortnews: Bigpoint mit Head of Licensing, Goldfarmer aus China ohne Arbeit | GameBizz.de - Onlinegames & Business says:

    [...] Inside Social Games Venture Beat [...]

  3. Alexis Kennedy says:

    Why have all the sites I respect gone nuts over this thing? :)

    As Matt says, QQ coins are the issue here, not gold farming.

    Even the peripheral effect on gold farming is likely to be trivial. The articles you folks linked above point out that you can still sell in-game items for real money – so even if WOW gold was banned, WOW equipment and materials is still legally tradeable.

  4. Chinese Game Stocks Drop Amidst Virtual Currency Legal Worries says:

    [...] Chinese government has banned the sale of virtual currency for real money, which has caused some repercussions in the Chinese gaming industry. According to a report from [...]

  5. Another Look at Chinese Revenues: Changyou Stays Strong says:

    [...] performance was unflinching against the stock drops it saw shortly after China’s new virtual currency laws, as the company has posted record financial highs over the course of the second quarter this [...]

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