Virtual currency requires tough new regulations 2007-02-12 15:56:11

    BEIJING, Feb. 12 -- In this era when the cyber world easily messes up with reality, tough laws are necessary to tackle problems never before encountered.

    The "QQ" coin, a kind of virtual currency issued by Tencent, a Chinese internet service company, has become so popular in the country that the People's Bank of China has expressed concern over the coin's possible impact on the value of the yuan.

    Tencent is now the largest instant online messaging service provider in the country.

    It claims to have more than 220 million users, and its QQ coins can be easily purchased via banks, cell phones or "QQ" cards at an official price of one yuan (12.5 cents) per coin.

    Although there have been major debates since late 2006 over the legitimacy of virtual currencies, Tencent has been shunning criticism by claiming that its QQ coin was merely a regular commodity, and thus not a currency.

    "The fact that the QQ coins cannot be officially changed back into money makes them less than harmful to the financial market," said Song Yang, an assistant public relations manager at Tencent.

    Coins of no return

    Yet, it might also be the same fact that backfires against a healthy economy.

    Once the company gets the money that people paid for the QQ coins, they can do virtually anything with it.

    They can invest in real estate or the stock market, without having to return a penny.

    It's not just as if they are opening a bank - but the bank could possibly turn into a black hole.

    "The QQ coin, as a financial tool, reminds me of the prepaid card, which is new even in the United States," said Zhou Yi, an associate professor of economics at Fudan University.

    "For example, if you deposit a certain amount of money in a telephone card, you should be able to get a refund whenever you want, which is how the prepaid card system works. But with the QQ coins, you are not officially allowed to do so."

    (Source: Shanghai Daily)

Editor: Li Yingxue
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