China has unveiled regulation aimed at curbing the practice of 'gold farming', by curtailing trade in virtual currencies, restricting their exchange for cash or goods and preventing online gambling.

Interestingly, Chinese officials see online currencies as a potential threat to the country's official currency. Mind you, we are talking about the same people who perceived a single unarmed bloke standing in front of a battalion of T-55 tanks as a threat to national security.

The legislation will heavily affect 'gold farming', a scheme which involves employing young Chinese to play online games and sell their virtual goods, money or accounts to decadent western gamers. The phenomena is quite widespread, and the authorities say they will closely restrict issuing of virtual currency and they will prohibit sales of virtual goods and currencies, as well as the exchange for real goods.

According to the China Internet Network Information Center, virtual currency trade in China amounted to almost $2 billion last year alone. We wonder if anyone can keep track of China's 300 million internet users and effectively enforce the legislation, especially considering the huge profits generated by the practice.

More here.