China Cracks Down On Virtual Currencies

There’s a lot of reports of the Chinese government’s decision to ban any new internet cafes for a year, but Forbes was one of the few sites to note that the government has also implemented restrictions on virtual currencies, for fear that they would wreak havoc on China’s real-world economy. As part of the measures China has said that “the redemption of virtual currencies in value exceeding their original purchasing prices will be banned to prevent attempts to realize profits”, and has prohibited using virtual currency to buy real goods, with violators subject to financial penalties under China’s banking law. According to Forbes there are at least 10 types of virtual currencies in China, and the market is believed to be growing at a yearly rate of between 15-20 percent. It is estimated to be worth several billions of dollars — or tens of dollars for every person online in China, estimated at 137 million. I’m not sure how much of an issue this really is — GigaOm had a good breakdown of the caveats around Anshe Chung’s claim to be the first virtual millionaire that would apply here.

Comments have been disabled for this post