China Tightens Grip on Game Coin Trade, Demands CBDC Wallets

New Regulations Target Online Gaming Economy

In a significant regulatory move, China has introduced draft rules targeting the online gaming industry, focusing particularly on the management of in-game spending. This step is part of a wider crackdown on the digital gaming sector, signaling increased government oversight.

The central point of these new regulations is the mandatory use of real-name central bank digital currency (CBDC) wallets for game coin trading services. This measure aims to curb anonymous transactions and tighten control over digital currency flows within the gaming ecosystem.

Spending Limits and Ban on Certain Rewards Imposed

The draft, released by the National Press and Publication Administration (NPPA), outlines several key measures. It mandates that service providers dealing in digital renminbi (RMB) must operate under the true names of their users, effectively eliminating anonymous services. Additionally, the draft prohibits the conversion of game coins to fiat currency.

The proposed rules also include spending caps within games and the elimination of daily login incentives. There's a specific focus on live-streaming gamers, with regulations set to prohibit significant tipping and ban probability-based luck draws for minors.

Furthermore, the regulations stipulate a 60-day processing period for game approvals. They also require game publishers to maintain their servers within Chinese territory.

Public consultation on these draft regulations is open until January 22, 2024.

Chinese Tech Stocks Suffer Heavy Losses

The announcement of these new regulations triggered a sharp downturn in the stocks of several Chinese tech giants. The market witnessed a substantial erosion of value, with billions wiped off from their collective market capitalizations.

Tencent, a multimedia behemoth, experienced a significant decline, dropping 12.35% in the Hong Kong market. This fall resulted in a loss of 367 billion Hong Kong dollars (approximately $47 billion) in market capitalization. Other major players like NetEase, Bilibili, and Kuaishou also faced severe losses, marking a tumultuous period for the tech industry in the wake of these regulatory changes.

China's latest regulatory measures reflect its ongoing effort to exert greater control over the burgeoning digital economy. By mandating the use of CBDC wallets and imposing strict rules on in-game economics, the Chinese government is reinforcing its stance on digital currency management and online gaming conduct. This move, while aiming to regulate the sector, has had immediate repercussions on the market, as evidenced by the steep decline in tech stocks. The long-term impact of these regulations remains to be seen, but their introduction marks a significant shift in the landscape of digital currency and online gaming in China.