Virtual Currencies Can be Risky to Both Consumers and Regulators in China

by Mercator Advisory Group 0

A recent article discussed the current status of virtual currencies in China and the risks (despite the regulators’ efforts to provide better guidance ) associated with them.

People may purchase virtual currency with real currency and buy all kinds of game accessories from various companies. In the future, Sina may unify UB and its newly issued virtual currency in one virtual currency.

Most providers are reluctant to talk about the amount of virtual currency they issue and its regulation. Although it is purchased with legal currency, virtual currency is not currency in the real sense and is thus not subject to the same legalities and regulations. Virtual currency is stored in electronic form and is limited to the Internet environment for equivalent exchange within the scope specified by the issuing body. Still, it could bring risks.

in April 2007, when replying to reporters, the deputy governor of the People’s Bank of China said that consumers should be concerned about the security of online virtual currency. To protect the interests of consumers, it is important to prevent online virtual currency and online payments from being applied to some illegal and unhealthy places, such as online gambling or money laundering. Sound development of online virtual currency should be promoted through standardization, the official said.

In 2009, to standardize the online game market order, as endorsed by the People’s Bank of China, the Ministry of Culture and the Ministry of Commerce jointly issued the “Notice on Reinforcing the Management of Virtual Currency for Online Gaming.” This Notice made clear that one enterprise couldn’t issue and trade virtual currency at the same time and virtual currency could not be used to buy material objects.

Regulators are also tightening up the overall payment services market while setting capital requirements and business rules through recent regulations.

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