China will ban the use of virtual currency in trade of real goods and services to limit its possible impact on the nation’s real financial system.
A joint circular issued by the Ministry of Culture and the Ministry of Commerce spells out a definition of virtual currency which includes prepaid cards of the virtual game but excludes any outfits such as costumes and weapons.
The circular said, "The virtual currency, which is in exchange with real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services."
Media reports showed the virtual money trade topped several billion yuan last year after rising around 20% annually.
China View reported that since 2007, the vibrant virtual money trading has caught the attention of the government officials, who demanded tighter controls as it had become a hotbed for gambling and illicit trade under the guise of e-commerce.