Wednesday, January 20, 2010

Korea Inches Closer to Virtual Currency

We've previously discussed here on the blog the increasing interplay between virtual assets and real-world money. In the coming years, the waves of government regulation and legal action will continue to build amplitude as the virtual assets created within virtual worlds become more easily and profitably converted to real world money. With virtual worlds growing in size and the online gaming player population booming, the development of the law in this area will have wide-reaching ramifications.

The Supreme Court of Korea marked its involvement on Sunday, ruling that virtual currency used in online games may be exchanged for real-world cash.

The ruling was the result of the acquittal of two gamers, who were originally charged with violating a Korean law targeted at online gambling, which banned the exchange of virtual currency for hard currency. The gamers were accused under the law with selling virtual currency know as "Aden" from a game known as Lineage. The Korean Supreme Court held that trading virtual currency for cash should be punished only in cases where it is obtained by online gambling, such as poker or a lottery.

The decision to allow the trading of virtual assets for cash raises the scepter of government regulation of virtual currency exchanges, and of increased scrutiny for the game developers and third party facilitators that run these exchanges. A Korean court ruled in September of last year that profits from the trading of virtual assets should be subject to 10 percent value added tax. As the legal landscape around virtual assets and real world money continues to take shape, don't be surprised if, in the near future, gamers will be considering the legality and tax implications of buying or selling their extra loot.

Read More...