China Proposes Ban on Exchange of Game Tokens for Real-World Currency

This is considered a pre-emptive move to regulate China’s growing Web3 gaming industry.

Recently, a draft issued by the General Administration of Press and Publication (GAPP) of China proposed a series of new regulations for the GameFi industry. Specifically, companies must obtain a license in China to store customer data for up to two years, ensure compliance with a list of state and socialist values, rule out any opportunity to publish anonymous user signatures…

draft China’s General Administration of Press and Publication (GAPP) has released new regulations for the GameFi industry.

The most eye-catching regulation is a ban on converting game tokens into fiat currency and prohibiting them from entering the real economy.

What is fiat currency? How does Fiat impact the cryptocurrency market?

This was seen as a pre-emptive move to regulate China’s growing Web3 gaming industry and was met with mixed opinions from the community. However, according to a statement from the General Administration of Press and Publication, the main purpose of the new regulations is to minimize financial risks, illegal fund-raising and money laundering – issues often associated with unregulated cryptocurrency use.

In addition to this exchange ban, the draft also imposes strict standards on the issuance of game tokens. At the same time, it emphasizes the transparency and rationality of the distribution and trading standards of these tokens, as well as the government’s approach to protecting consumer rights and maintaining financial stability.

Additionally, the draft restricts game providers from offering rewards to users (daily sign-up or login bonuses). Providers must also set recharge limits and reminders for users to warn of “users’ unreasonable consumption behavior.”

Rules could kill blockchain gaming

At present, the draft is only open for public comment and has not yet taken legal effect. The deadline for comments is January 22, 2024.

However, these regulations are expected to have a significant impact, especially on Web3 game developers and operators in the gaming industry. The inability to convert in-game tokens into fiat currency could change the economic model of many blockchain-based games, potentially impacting their popularity and profitability.

Experts believe that while these regulations can limit speculative trading and ensure better regulation, they can also stifle innovation in the gaming industry, which is an important driver of innovation.

VIC encryption compilation

related news:

Fortune Business Insights Report: Web3 gaming industry will reach US$614 billion by 2030

China aims to innovate web3 with national framework for NFTs and dApps

U.S. lawmakers submit new bill to ban officials from Chinese blockchain projects

China partially lifts ban on NFTs