International Law

CSRC, CBRC Not Going to Like This

By Stan

The latest in virtual fun:

Shanghai-based online game company Giant Interactive (NYSE:GA) released a "stock trading" platform for gamers of its in-house developed 2.5D MMORPG Giant Online to trade virtual coins in January. Transactions, including exchanging gold for silver coins, will be charged 2% commission. The game’s gold coins can only be purchased with real money, while silver coins can only be acquired in the game.

Sounds harmless, I suppose, but the government has been pretty clear in the past few years about this kind of activity — you may recall when they cracked down on different uses of QQ coins. Essentially, when an online company starts acting like a bank, the CBRC (banks regulator) could get involved and stop the offending activities. I haven’t seen this "stock trading" type of thing before, but no doubt the CSRC (stock market regulator) will be taking a look. This all gets rather complicated, of course, because normally a computer game company does not fall within the jurisdiction of either the CBRC or CSRC. When a company encroaches on their turf, one way for them to get action is to complain to the AIC (companies regulator), essentially telling the AIC that they should investigate the offender for operating outside their stated business scope. This would work fairly well if government agencies here worked together and communicated on a regular basis (they don’t).

Listen, enforcement issues notwithstanding, the government really doesn’t like it when virtual currency starts acting like the real thing. When they went after QQ coins, the rhetoric was quite heated, with the gov’t saying that the value of the RMB was in danger. A bit of hyperbole, to be sure, but they consider this to be serious business.

I’m very curious, therefore, as to what will happen with Giant on this. Have they cleared all this with the authorities? {giggle} Or did they decide to go for it and see what happens?

Time will tell, but I have a feeling that this is not going to be a long-term project.

Full post as published by China Hearsay on February 11, 2009 (boomark / email).