No Second Life For Virtual Banks
For months, as banking meltdowns in the virtual world Second Life cost participants steep losses of real money, corporate owner Linden Lab of San Francisco stuck to a laissez-faire line, essentially saying, “We just host the software; residents should avoid deals that sound too good to be true.” But this week, Linden Lab abruptly banned virtual banks that can’t furnish “proof of an applicable government registration statement or financial institution charter.” The problems arose with many organisations offering residents unsustainably high interest rates. According to this story, one virtual-bank meltdown may have produced aggregate losses of some $700,000 in real money to many hundreds of Second Life “residents” in a manner that would be illegal in the real world. Here is the policy document from Liden Labs regarding inworld banks in SL. For more also visit this section in FAQs.
Wall Street Journal has a detailed story here