Banks banned in 'Second Life'

On the heels of banking scandals in the virtual world Second Life, its publisher Linden Lab announced Tuesday that it is effectively banning in-world banks.

"As of January 22, 2008, it will be prohibited to offer interest of any direct return on an investment (whether in Linden dollars or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter," Linden Lab wrote on its blog Tuesday. "We're implementing this policy after reviewing resident complaints, banking activities and the law, and we're doing it to protect our residents and the integrity of our economy."

The move comes after some residents lost money they'd entrusted to in-world banks like the now-infamous Ginko Financial last year. And the decision by Linden Lab is clearly aimed at restoring faith that some had lost in the stability of the virtual world's economy.

It also comes less than a year after Linden Lab banned casinos in Second Life, another move aimed at demonstrating that the economy is on the up-and-up and therefore not something that government officials should spend too much time looking at.

In the early hours after the Tuesday announcement, Second Life residents are mixed in their opinions about the banking ban.

"So the existing so-called 'bankers' and 'stock exchanges' can just take the cash they have collected and run, eh," wrote Second Life resident Ann Otoole in a comment responding to the Linden Lab blog post. "Glad I never fell for this scam, but a lot of residents are going to be hurt so maybe (Linden Lab) should seize the assets of these 'banker' accounts right now and then figure out what to do with the assets. The amounts of (real life) money involved is pretty high and it will be sad to see these people get away scott free with nearly a million U.S. dollars."

But others supported the decision and saw the benefits of removing a controversial element to the SL economy, which sees around $1.3 million in activity every day.

"Thank you for doing this," wrote SL resident Lukas Mensing in the comments section of the blog. "(It's the) first step to a real virtual economy."

Whether the move will stabilize the economy, or at least perception of the economy remains to be seen. But it's pretty clear Linden Lab had to do something to stave off criticism related to banks that have folded, taking residents' money with them.

But only time will tell whether the decision will have any meaningful impact. And for those residents who have used the banks for various financial purposes, it will be very interesting to see what alternatives they have available in the months to come.

[azieger]

Second Life biz is inevitable

Thanks for an interesting piece. I'm late to the Second Life party, so I didn'tk now about the previous financial scandal, but it doesn't surprise me. Glad to hear SL is cracking down.

Still, it seems that when it comes to retail, events and clubbing around, big real-world conglomerates will remain sold on SL (http://whatmattersonline.wordpress.com/2008/01/04/corporate-spending-on-second-life-keeps-growing/). It's still a great platform for reaching out to customers.

[huskerbrown]

If you are looking for a "real virtual economy"

If you are looking for a "real virtual economy", then all you have to do is look to Entropia Universe. They've had a "real virtual economy" for years now. There are even registered and regulated banks in game. Come check it out. Look me on and I'll show you around. :)

[crad13]

Perhaps

Yes, Entropia might have banks the like, but EVE Online has a fully player-driven economy, with NPCs minimally engaging in the buy/sell.

[bombmaster2]

I guess my concern is that Linden Labs will be removing ATMs from Second Li

I guess my concern is that Linden Labs will be removing ATMs from Second Life. Many of these are used for exchanges not banking. Linden Labs said: ?As of today, this policy is generally focused on objects and schemes that involve real-time transfers of L$ and payment of interest or rates of return. Exchanges may or may not do this, so they may or may not be covered.? read more here: http://www.secondlifeupdate.com/2008/01/08/in-response-to-ginko-financial-linden-labs-has-released-a-new-policy-on-in-world-banks/

[bombmaster2]

link

I guess my concern is that Linden Labs will be removing ATMs from Second Life

[scope213]

If you want a real virtual economy...

go play World of Warcraft imo. ;)

[Leria]

World of Warcraft is pretty real life

Including the outrageous prices for some complete sets of 'uber-gear' as I call them!