Talk About “Off-Shore Banking…”

by Chris Borgen

 Financial crisis getting you down?  You can always move your money to the virtual world of the Planet Calypso:

Interstellar banking isn’t here yet, but at least you can pretend. The publisher of the online science-fiction game “Entropia Universe,” set on the planet Calypso, received a banking license from the Swedish Financial Supervisory Authority last week and plans to open a real bank within a year, albeit one without physical, walk-in branches.

Players of “Entropia” already exchange real money for a virtual currency that is used for their expenses on Calypso. And virtual money they make in the game, through hunting, mining, trading or other activities, can be cashed out into real money. The virtual currency, Project Entropia Dollars, has a fixed 10-to-1 exchange rate to the U.S. dollar.

The Entropia bank will provide a wide variety of services:

like interest-bearing accounts, direct deposit of paychecks, bill payment and lending, said David Simmonds, the company’s business development director.

The company isn’t clear on what type of lending it will engage in, but Simmonds said it wasn’t planning to make the sort of risky investments that have foiled other banks.

However, for all the talk of new “virtual” economies, we need to keep in mind that they are very much rooted (at least for now) int he real world. Deposits in this virtual bank will be guaranteed by the Swedish government’s deposit insurance for up to $60,000 per customer. As this is a government-licensed bank,

regulators will gain more insight into possible money laundering in the virtual world. Simmonds said the company is already keeping an eye out for such activities.

So, I wouldn’t get too excited about escaping the financial crisis in a virtual world, but an interesting development nonetheless.

Belated Hat Tip: io9

http://opiniojuris.org/2009/03/19/talk-about-off-shore-banking/

2 Responses

  1. Doesn’t Second Life do this to a certain degree?

    I can’t say I frequent MMORPGs where you can buy in-game items with real world money, as it seems to unify the both a “time sink” and a “money sink”

  2. Yes, there are various groups in Second Life and Entropia that have started “virtual financial institutions.” I wrote a about one example here. I think this new case is interesting because of the Swedish banking license (and Sweden, as Kevin has written, has actually opened an embassy in Second Life).

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