China Drafts “Regulations for the Management of Online Games”: Prohibiting Virtual Currency Speculation and Excessive Spending
China’s government has released the “Internet Game Management Measures” draft for public opinion, which includes several provisions that may not be favorable for the development of NFTs and blockchain games.
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China’s extensive regulations may hinder the development of blockchain games
Prohibition on speculative trading and high-value consumption of virtual assets in online games
Players must undergo KYC and register with their real names
In-game currency can only be used within the game
Digital RMB purchases of game currency also require real-name registration
Virtual asset issuers are prohibited from converting virtual assets into legal currency
Overseas blockchain games are regulated by their respective countries
Violations will result in fines equal to 10 times the revenue
Is the media hype about China’s openness to Web3 and NFT true?
Article 18 of the “Internet Game Management Measures” restricts high-value consumption in games, stating that online game operators and publishers shall not provide or tolerate virtual item trading at high prices through speculation or auctions. All online games must set user recharge limits and disclose them in their service rules. Pop-up warnings should be given to users engaging in irrational consumption.
Article 22 of the measures states that online game operators and publishers shall require users to provide true identity information when signing agreements or using services. If users fail to provide authentic identity information, the operators and publishers shall not provide relevant services to them. Strict implementation of user real-name registration and login rules is required to ensure the authenticity and validity of user identity information.
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Article 23 stipulates that the use of in-game currency is limited to exchanging for the online game’s own products and services, and cannot be used for payment, purchase of physical goods, or exchange for products and services from other entities. Providing services to exchange in-game currency for legal currency is prohibited.
Article 24 states that digital RMB wallets with real-name registration should be used for transactions involving in-game currency, and anonymous digital RMB wallet transaction services must not be provided to users.
Article 23 also prohibits online game operators and publishers from converting virtual items obtained by users into legal currency. If they provide services to exchange virtual items for small physical goods, the content and value of the goods should comply with relevant national laws and regulations.
According to the “Internet Game Management Measures,” if websites or online game servers are hosted overseas, jurisdiction falls under the jurisdiction of the place where the illegal activities occur.
The measures also impose requirements on game operators regarding qualifications, consumer protection, protection of minors, and dispute resolution. Units responsible for promoting online games also have a joint verification responsibility. Game operators need to submit annual reports to the registered government agencies.
Unauthorized operation may result in fines up to 10 times the revenue, as well as related criminal and civil liabilities.
Previously, the media interpreted the content of a proposal on the development of the Web3 industry and NFTs presented at the National Committee of the Chinese People’s Political Consultative Conference as a positive sign of the Chinese government’s openness to these industries. However, the response from the Ministry of Science and Technology of China still emphasizes the need to comply with current laws and regulations in China. All blockchain applications must meet the requirements of existing laws, such as KYC, non-involvement of legal currency, and prevention of speculation.
If China has compliant blockchain games, they must also comply with the requirements of the “Internet Game Management Measures,” which may not meet the expectations of industry insiders.
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NFT
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Further reading
Nexon Compilation | How will MapleStory Universe in Web3 utilize UGC and modules to enhance player gaming experience?
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