Legal Issues

by Joseph Weisenthal

Report Urges Greater Regulation Of Virtual Economies

from the here-comethe-regulators dept

As governments continue to wrestle with the question of how to regulate virtual worlds, a new report out of the UK is urging the government to regulate in-game finances as it would regulate transactions in the real world. In particular, the group is concerned that virtual worlds like Second Life will be used for tax evasion and money laundering. This actually sounds like a reasonable concern since the increasing size and sophistication of these virtual economies should make it easier to move large amounts of money between various parties in a way that can't easily be tracked. Given the growth of these economies, a certain level of government regulation is simply inevitable. The question, then, is how should the government frame this regulation. It would not be surprising to see governments treat Second Life (and its ilk) as quasi-banks, and require them to keep some information about who is "depositing" assets. There will be some objections to this based on privacy grounds, but then these objections could just as easily apply to the government's oversight of the broader financial sector. What would be unreasonable is if the government actually starts to intervene in the gameplay itself. For example, something like in-game theft, whereby one avatar steals assets from another, may look untoward, but it would be a mistake for the government to treat such actions as actual theft. Ideally, those issues would be left up to the virtual world itself. Again, there's little to no chance that governments around the world won't, over time, step up their regulation of virtual worlds. Knowing how government operates, these regulations will almost certainly produce negative unintended consequences. The best hope is that the governments gain a fairly good understanding of the issues so as to minimize the harm caused.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Steven, May 15th, 2007 @ 1:34pm


    "The best hope is that the governments gain a fairly good understanding of the issues so as to minimize the harm caused."

    Oh man, that's a good one. And about as likely as me walking to Mars.

    reply to this | link to this | view in thread ]

  2. identicon
    Betaflame, May 15th, 2007 @ 2:23pm


    Being a virtual world, what would give the goverment the right to regulate what could be seen as a private country?

    reply to this | link to this | view in thread ]

  3. identicon
    JT, May 15th, 2007 @ 2:41pm

    Virtual world economies??

    Interesting that the governments think they can track currency in virtual worlds when the virtual worlds themselves can't. WoW is fighting against the tide with the gold issue and for every site they put out of operation or thousand users they ban, 20 more sites just like spring up.

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, May 15th, 2007 @ 2:43pm

    Juristiction is where you are physically located. Even if you are in a virtual world, your physical body is located in a real world.

    The country where the virtual world's servers reside, or where the virtual world's company is located would probably regulate. There are cases of theft of virtual property, though, insignificant.

    The virtual world should have it's own rules and regulations. It should cover anything possible. For instances where there are no such rules, then I believe that people should be accountable for damage done.

    There are also issues between the virtual world and the participants of the virtual world. Participants usually have no rights, even though they paid for the service. There should be some sort of new laws/rights given to participants of the virtual worlds so that they can't be taken advantage of.

    reply to this | link to this | view in thread ]

  5. identicon
    chon, May 15th, 2007 @ 2:49pm

    Yeah sure dude

    "The best hope is that the governments gain a fairly good understanding of the issues so as to minimize the harm caused."

    As long as your fantasizing why not go all the way and ask for a corvette driven by a nude supermodel?

    reply to this | link to this | view in thread ]

  6. identicon
    Apennismightier, May 15th, 2007 @ 3:08pm

    Are you telling me that eventually I could go to jail if I buy gold on World of Warcraft?

    reply to this | link to this | view in thread ]

  7. identicon
    rofl, May 15th, 2007 @ 4:14pm


    LOL as if the government knows/cares what second life is.

    reply to this | link to this | view in thread ]

  8. identicon
    Myself, May 15th, 2007 @ 6:45pm

    Shadow economies

    Airline "miles" are the current untaxable currency. Nobody's regulating them yet...

    reply to this | link to this | view in thread ]

  9. icon
    Killer_Tofu (profile), May 16th, 2007 @ 6:37am

    Government Priorities

    Yes, great idea, focus on taxing people who play games.
    Stupid people.
    How about you start off with tougher laws on CEOs and other crooks like them who siphon off shit tonnes of money over seas so as to avoid their actual darn taxes.
    That right there would give the country billions upon billions.
    And I am sure CEOs in other countries besides the US do it too.

    Focus on taxing games, HA!
    They can't even tax people in real life as they should be already.

    The ONLY case I could EVER see as worthy as taxing, is Second Life, since it specifically tries to emulate life, and specifically maintains an exchange rate to US dollars.
    No other game maintains such a rate (at least that I know of). Therefore taxing any other virtual game is futile.
    It is just somebody's time and a few bits on a computer that can't easily be turned into money. There are plenty of places people buy in game money for real life money (like ebay) but the government doesn't tax all Ebay sales either. Sales of used goods.
    So again, taxing anything other than Second Life is about as stupid as a government can be. Go after the crook CEOs and other jerks who jack off their companies and leave the employees empty handed. Make tougher laws against overseas tax evasion.
    Priorities people.

    reply to this | link to this | view in thread ]

  10. identicon
    Matt Bennett, May 16th, 2007 @ 12:09pm

    Ok, fine, a government decides to regulate Second Life. But which government? Can something of that nature really be said to BE within the limits of a particular country. Sure, the servers actually reside within the San Fran bay area. But what if they don't? What if they're distributed? Second life is already looking at distributing and possibly open sourcing their world for this purpose.

    This greatly parallels the issues regarding censorship or whatever of American websites by other countries, simple cuz that site can be viewed in that country. You've pointed to these issues yourself.

    reply to this | link to this | view in thread ]

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Use markdown for basic formatting. HTML is no longer supported.
  Save me a cookie
Follow Techdirt
Insider Shop - Show Your Support!

Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Report this ad  |  Hide Techdirt ads
Recent Stories
Report this ad  |  Hide Techdirt ads


Email This

This feature is only available to registered users. Register or sign in to use it.