On March 18, FinCEN – the financial crimes enforcement arm of the United States Treasury – released guidance regarding the use of BitCoin and other virtual currencies that are exchanged for actual cash.
This ruling could have meaning, however, for “gold farmers” as well.
Gold farmers, or businesses that deal in the buying, selling and trading of virtual items and currencies used on most of today’s popular multiplayer online games, could possibly be facing increased regulatory scrutiny as a result of the guidance, which refers to individuals or entities that “accepts and transmits a convertible virtual currency” or “buys or sells convertible virtual currency” as a “money transmitter” – a person that provides money transmission services or is otherwise engaged in the transfer of funds.
The designation has some potential far-reaching consequences for the virtual item resale industry, who exchange players’ real currency for virtual items and in-game money. However, FinCEN representatives were careful to point out that any business with questions should contact them for further guidance.
“These are initial reactions to hypothetical situations,” FinCEN said when reached by The Powerbase Friday. “Anybody who is making a business out of these activities should contact FinCEN for an opinion on the individual facts and circumstances of their business.”
FinCEN also stressed that end users and entities that dealt with non-convertible virtual currency – like Amazon Coins or Facebook Credits – were not affected by the guidance, nor were individuals that traded virtual currencies or items only for other virtual products were similarly excluded.
“We’re primarily concerned with entities who are making actual, real-world businesses out of these virtual activities,” FinCEN said. “If all that is happening is selling the virtual items for the virtual currency within the game space, that activity is not money transmission. Also, if the virtual currency is not convertible back to legal tender or only usable in the virtual game, then it is not covered by our guidance and this would not constitute money transmission activity.”
Virtual item resale is a growing industry according to trade reports. In an April 2011 study, the World Bank Group’s infoDev unit reported a potential industry size of $3 billion as of 2009 and estimated that up to 100,000 people were employed in the “gaming-for-hire” trade. Businesses like Lewt, IGE and MMOGoldBay are industry mainstays that could be potentially affected as a result of the guidance.
None of the three companies had responded to an emailed request for comment as of press time on this developing story.