China's Virtual Currency Threatens the Yuan

From Asia Times Online:

"The so-called "QQ" coin - issued by Tencent, China's largest instant-messaging service provider - has become so popular that the country's central bank is worried that it could affect the value of the yuan. Li Chao, spokesman and director of the General Office of the People's Bank of China (PBOC), has expressed his concern in the Chinese media and announced that the central bank will draft regulations next year governing virtual transactions."

"Tencent argues that Yang and the PBOC are overreacting, and some Internet analysts agree. Nevertheless, there is no question that the virtual-currency trend is catching on in China, and the endgame is unclear.

Tencent boasts more than 220 million users, and its QQ coins can be purchased with a bank, telephone or "QQ" card at an official price of 1 yuan (12.5 cents) per coin. Originally, the virtual coins were designed to pay for Tencent services such as electronic greeting cards, online games and anti-virus software. Now, however, they have reportedly developed into an alternative currency traded on the black market and used for other, less savory services, such as online gambling and private chats with "QQ girls"."