[Opensim-users] Virtual World Currency gets more complicated

[Karen Palen]

Sorry, I thought that people would use this as a pointer to read the actual articles and the comments.

My position is far from a simple "do it" or "don't do it", but rather "be aware of all the implications and check with a good lawyer FIRST!"

Most of us (myself included) run a private grid just as a hobby - I have no plans to make money from it ever! Even if people donate to the expenses this MAY be seen as being similar to a group sharing the expenses of a camping trip, many of the speciality grids are presently run like that.

On the other hand, the minute you actually "do business" on your grid though, you ARE a business and a whole different set of rules apply!

The trouble is the term "doing business" has a different definition in just about every part of the world!. If you buy and sell things for a profit (even virtual things) then you are clearly a business though.

That has implications about liability and insurance, licensing of various sorts, and a total lack of any "consumer protection" laws!

Taxes are one aspect, but others are money laundering laws, currency exchange laws, accounting requirements, and gambling laws. Gambling is what the Korean lawsuit was about, the game players were accused of gambling and faced jail time for it. The court found that they "earned" the money, freeing them from that problem, but opening up many others.

There are also laws about "fiduciary responsibility", in other words if you handle someone else's money then you have certain "duties of care" under the law. In some cases you can be criminally liable for not knowing and following these laws, Bernie Madoff is an extreme example.

It is entirely possible that someone who simply sells a US$1 item at an inworld flea market could be held to be part of the "management" and lose everything they own because of a mistake made in managing the grid! House, cars and (ARRRGGH!) computers included!

One of the companies I manage (an LLC) is pursuing someone for violating securities laws because they did not provide all of the paperwork to me on time (they waited 6 months, by which time both the investment and the promised security were worthless). It is unlikely, but that person could do jail time for that oversight. It is VERY likely that they will end up paying 25% of their income for the rest of their life though!

Forming an LLC will likely be your first step, for a good article about this see: 

http://www.realestatetaxlaw.com/choice%20of%20entity%20101.html

DO NOT take as much as L$1 in world until you have studied this and all of the other material around about starting and running a small business!

My point is simply this: once you take money there are a whole lot of new rules that apply and you had better know those rules!

Did I make myself clear this time? :-)

Karen

--- On Tue, 1/19/10, lamont cranston <l.cranston at gmail.com> wrote:

> From: lamont cranston <l.cranston at gmail.com>
> Subject: Re: [Opensim-users] Virtual World Currency gets more complicated
> To: opensim-users at lists.berlios.de
> Date: Tuesday, January 19, 2010, 5:09 PM
> if the currency is real, then you need to be
> cautious.
> The tax man is watching.
> 
> On Tue, Jan 19, 2010 at 5:32 PM,
> Jane Foxclaw <janefoxclaw at gmail.com>
> wrote:
> 
> Ok so your point here is that we
> should NOT go live with currency ? because I am lost as to
> what the point it is your trying to make here.
> 
> Sonya
> 
> On Tue, Jan 19, 2010 at 4:14 PM,
> Karen Palen <karen_palen at yahoo.com>
> wrote:
> 
> 
> This is from today's slashdot.org
> 
> 
> 
> 
> I know many OpenSim users are planning to set up soem form
> of currency exchange on their grids. THis si one of the
> aspects that needs to be considered before "going
> live".
> 
> 
> 
> Karen
> 
> 
> 
> http://games.slashdot.org/story/10/01/19/1653240/Virtual-Currency-Becomes-Real-In-South-Korea
> 
> 
> 
> 
> 
>  Virtual Currency Becomes Real In South Korea on Tuesday
> January 19, @01:29PM
> 
> Posted by Soulskill on Tuesday January 19, @01:29PM
> 
> from the license-to-print-money dept.
> 
> money
> 
> garylian writes "Massively is reporting that the South
> Korean Supreme Court has stated that virtual currency is the
> equivalent of real-world money. For those of you who might
> not be drawing the link, the core there is that selling
> in-game currency for real money is essentially just an
> exchange of currency and perfectly legal in South Korea.
> This could have sweeping implications for RMT operations the
> world over, not to mention free-to-play games and... well,
> online games in general. The official story is available
> online from JoongAng Daily."
> 
> 
> 
> 
> 
> 
> 
> 
> 
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