Virtual Currency & The Virtual Gaming Economy
Today’s online ‘virtual economies’ are a classic case of software & technology advances soaring past current laws. Will there be new laws coming for virtual gaming economies similar to the ‘Unlawful Internet Gambling Enforcement Act’?
Will US gamers get hammered like the recent attack to US online gamblers? Considering that these virtual worlds are a $3.4 billion dollar a year ‘cottage’ industry. They are starting to generate a lot of interest with government regulators worldwide.
Where does the Christian Coalition stand on ‘Virtual Gaming Currency’? Perhaps we should all write by Rep. Bob Goodlatte of Virginia who started the anti gambling ball rolling last year with H.R. 4777. After all, Rep. Goodlatte’s district includes Lynchburg, VA which is Jerry Falwell’s headquarters. Well, I can attack that topic at a later date.
The question is whether the government can or should tax virtual assets. The regulators are looking at the issue like this…. if a virtual player acquires assets in a virtual world, which via exchange can be converted into real dollars, should that new virtual asset be treated as taxable income? This seems to be very long stretch of the imagination.
In an October 2006 press release entitled, “VIRTUAL ECONOMIES NEED CLARIFICATION, NOT MORE TAXES”, Congressman Jim Saxton, who chairs the Joint Economic Committee in Congress (JEC) has stated that he does NOT feel that a step towards taxing transactions which occur in a ‘Virtual Economy’ is a step in the right direction. Personally, I agree.
The release goes on to state:
“The staff of the Joint Economic Committee has begun an examination of the public policy issues related to virtual economies. A virtual economy is defined as the universe of transactions that occur within an online community, such as Second Life or World of Warcraft. These transactions include the sale of goods and services and take place entirely within virtual economies; there is no real-world or physical exchange.”
“The goal of the forthcoming JEC study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies.”
Well hooray for Rep. Saxton, finally a common sense approach to ‘Virtual Money’ and government.
In another far off galaxy across the ocean, the Korean government has taken a much tougher stance than Congress. The Koreans are banning all transactions between virtual currency and real currency!
A great example of this type of transaction takes place in the virtual Entropia Universe. Entropia Universe is a massive online virtual universe. Entropia goes so far as to offer users a plastic debit card for exchanging their virtual currency ‘PED’ into ATM cash. According to their web site,
“The Entropia Universe is more than a game. The Entropia Universe is for real. Real people, real activities and a Real Cash Economy in a massive online universe…The Entropia Universe Cash Card is a Reloadable Debit Card. Not associated with any bank, the Cash Card can be used to withdraw funds from your Entropia Universe PED account from over 1 Million ATM Machines Worldwide. ” (Entropia Universe currency, the PED, has a fixed exchange rate with the US dollar, where 10 PED = 1US$)
Its obvious that US lawmakers can already spot the regulatory problems which could come from such an ATM card virtual currency exchange - ‘Not associated with any bank’. That idea is NOT going to fly in the US.
Entropia Universe was launched in 2003 and has over 500,000 registered accounts. Other popular virtual worlds with their own currency boast many more users such as Second Life, EverQuest II, World of Warcraft and Ultima Online.
Julian Dibbell, author of the book “Play Money: Or, How I Quit My Day Job and Made Millions Trading Virtual Loot” estimates that the real-life sale of virtual goods generates around $880 million annually. Dribbell thinks there are an estimated 100 million players worldwide contributing to what are known as massively multiplayer online role-playing games and the growth of that industry has been enormous the last few years.
Virtual service and currency exchange companies are nothing new on the Net. There is a company at www.gameusd.com which keeps daily tabs on the exchange and conversion prices of virtual game currencies. Founded in 2001 another popular web is www.ige.com. IGE describes itself as:
“IGE is a diversified service provider operating the world’s largest secure network of buying and selling sites for massively multiplayer online game (MMOG) virtual currency and assets on the Internet.”
These webs provide both buyers and sellers an outlet for items and virtual currency. Since the prices of game currencies can change frequently GameUSD.com offers price comparisons of the top stores which offer in-game currencies for sale and GameUSD.com boasts some of the lowest price for their customers.
It is no big surprise that governments around the globe are taking a closer look and showing some new concern about virtual non-regulated currencies.
More on virtual gaming currency all this month.
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POSTED IN: Debit Cards Withdrawals, Online Currency
2 opinions for Virtual Currency & The Virtual Gaming Economy
DigitalMoneyWorld.com - eBay Halting The Sale of Virtual Game Currency & Property, Second Life Products Are Still Allowed
Feb 11, 2007 at 1:38 pm
[…] Last month I took a brief look at Virtual Game Currency and its growing popularity. What I found was a large secondary market for game virtual products that has been operating mainly through eBay. […]
World’s First Virtual Currency Banking Licenses Issued At Entropia Universe
May 8, 2007 at 2:59 pm
[…] while in the fantasy world can be quickly and easily withdrawn in US dollars. They even offer a debit card. I wonder if they will have an Anti-Virtual-Money Laundering […]
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