Deadline - Cut off point for in-game financial services

(Quote)
"As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy." (End Quote)

As we all know today is the Linden deadline for in-game financial services. The cut and paste from the Linden blog makes that fairly clear.

In theory from today onwards any new transaction or financial services product offered in game via a person or company must hold authorisation from a relevant first life regulatory authority (Examples FSA in the UK or the Securities and Exchange Commission in the USA)

Would this comfort factor make it more or less likely for you all to give more serious consideration to using the Linden/SL platforms as a research tool for first life financial products?

Or do folks consider virtual worlds to be mainly for fun and unlike the main Internet and, due to this mindset, you would not engage in any real commercial activity in game on principle?

Perhaps folks might instantly distrust financial services products offered in virtual worlds BECAUSE they are advertised in-game rather than via the more traditional routes of the Net or even paper media?

Genuinely interested in views, perhaps this might spark an interesting debate, and of course other factors may influence any buying decision you may have folks

Most real life banks won't do business with you on an interest-bearing deposit account for any less than $500 to $1000 USD, so I'd imagine only the L$ millionaires are going to be doing any authorized investing within SL after today.

If there were some sort of in-world financial institution backed by a reliable RL entity then yes I would seriously consider investing some of my Lindens in one.

I think now that the unstable financial institutions are no longer allowed it increases the possibility of some real cool things to happen in SL in that area.
Imagine something like an E-Trade with a mechanism where you could view
your assets in a 3D visualization manner in real time.

I generally tend to think that once some time goes by and SL loses the reputation for being the Wild West in terms of its lawlessness then it could open
up some interesting possiblities. In the real wild west financial institutions did not
put their best assets there until it became more civilized.

I think that anything that enhances the credibility of SL will also enhance its functionality as a platform.

Preferably a grass roots company with people from within SL could form a legitimate financial institution that could really take advantage of it in terms
of real time graphical presentation. Not to mention the global method of communication and immersive interaction.

just think, this might be the very last "banking" thread we have to be subjected to.

nostalgia in the making....

You already can. Convert them to a real currency, run down to your local bank or broker and deposit therein.

But I see the Dow fell over 400 points at the open today. Maybe Ginko wasn't such a bad idea....

Honestly I don't think much will change, for the die-hard unprofessionals and scammers.

Anyone can run a bank website and start kicking currency around using anonymous alts.

i never did trust banks, i put all my lindens inside a cube i named 'Object' and then took it to inventory in a folder with 1000 other objects also named Object.


now its safe, no one can steal it, but i do spend alot of time rezzing cubes tring to figure out what one the money is it.....

That's what we thought about gaming threads but they keep rearing their ugly heads.

Yes, because now we're going to get into the "I just had a great idea about how I can make money by people giving me their money - is this a bank?" and the "here's how to get around SL's banking rules" threads!

A 512 area plot next to my mainland home had 2 ATM machines (aka give me your money so I can run to mexico with it machines). Yesterday the machines were gone and a FOR SALE sign was in the plot. I would have bought it but he wants a totally unrealstic amount, over 8100 lindens for it. (Do a search on 512 mature mainland plots for sale in the search and you will see thats on the high end). I suppose he couldn't screw people in the fictional bank market hes going to in the real estate! LOL

More to the point the problem with SL 'banks' are they operated by stealing from joe depositer to pay tom depositer interest. Then stealing from Tom to pay Freds interest... etc.. Eventually it seems it reached a critical mass where the 'interest' outgrew the avil capitol.

What banks should have done was follow exitting bank practices.

Give loans (with interest)
Morgages (with interest)
Reverse morgage loans (get the property after x amount of time)

Then offer for people to deposit their money with REASONABLE interest rates (prob 1-3%) based the income from the interests and RML's property sales. This will provide capitol for the above, and while some profit from loan interest will be given for deposit interest it should also be enough to actually make a profit and keep the bank a float once the bank gets on its feet.

But it all moot now as few (if any) people with any real knowledge in economics decided to start a 'bank' and screwed far to many users. so I am not sad to see them so.

I buy L$ with a RL debit card from my RL bank that gives me RL intrest on the USD within that account.

Why would I need a SL bank to give me intrest on L$ when I'm already making more with the RL financial institutions?

~Jessy

Moving money in and out of SL incurs a cost. It would be nice to have the option to make my money work for me while it is in-world. Bringing it out and then putting it back in would probably offset any benefits I would gain from RL investing it.

Don't get me wrong - I'm not going to be missing it if there is never a bank in SL - but the question was whether I would consider it, and I would.

Aside from the question of why any RL bank would bother doing business in SL, I don't see how most RL banks could do business in SL. In the United States banks are required to verify the identity of account holders with specified documentation requirements and it is probably the same for many other countries to deter money laundering.

I'm also under the impression that RL Banks actually prefer to do business with actual MONEY not "limited liability liscens tokens" or whatever they call this monopoly money.

LL claims it has no value, when the server "loses" 100,000L worth of assets from your account... when they sieze all your assets and close your account... when their server errors create transaction failures, etc etc. When they're liable, the L$ is a valueless liscence.

Can we really believe, after the last few days, that having real life financial institutions in SL is going to bring stability and security to us all?

Yeah, like the RL stock market.

Run!

Markets (or assets) go up and down, see how much money you could have made being the right side of most real life stock markets in early 2003.

In a similar vein I off-loaded most of my SL land to a willing land baron purchaser back in May 2007 at a flat $L 15 per square meter. That person begged me to sell him unlimited amounts of land at that price.......a good deal today and I wistfully wish I could have gone "short" on land at that point too!

The real point at issue here is if SL (or another type of 3d virtual world) could/can/will replace some aspects of the more traditional 2d web for real life business and would folk trust it, in the same way as we might trade shares via our online broker, buy at auction on EBay, or shop on line at Tesco (for US folk that is a food shop like Walmart)

Or are virtual worlds viewed as “for fun and entertainment only” and will have no significant real life economic interest apart from a few successful SL business’s (maybe a few hundred folk in plus 10 million registrations)

I think this question is not yet able to be answered, hence this post

Well, as there's nothing in-world to make an investment on, that isn't possible. RL banks use collateral to make loans (ie morgages on your house). When someone defaults on their loan, the bank takes the collateral. Immpossible to do here inside SL.

What SL Banks did was to pool all the L$ and move it into RL in large (comparatively) sums to make the transfer more profitable. The RL investments were then capitolised by the SL Bank owner and large sums were again brought back into SL once a profit magin was obtain. I imagine a bit of "day trading" on the LindeX was done here as well. The only bump in this road is getting enough capitol to pay off in-world debts while using other capitol to make a profit. Once that hurtle was reached, doing the "banking" was easy.

Individuals can still do the same without an SL Bank. Though, for most of us, it will be far more profitable to transfer funds in only one direction. That is, either we make L$ in-world (as buisnesses do) and transfer it into USD when we have excess, to be invested in RL Banks, or we manage USD in RL financial institutions and transfer that into L$ in sums that fit our budgets.

Investments of this type (and any other really), are not meant for the "get rich quick" style. Investments are called such because you invest. Not only money, but time, research and intelligence.

Investments can still be made. Residents can still pool their L$ together and have one person doing L$-USD/USD-L$ transactions. They just can not call themselves a "bank" and can not give out a set "intrest" return. If the people working together simply pool money for investments, and recieve a split of a % of the profit margin, then there is no "banking" involved.

However, the SL platform is owned by the privately owned company Linden Research Inc. Any parties thinking of going along such lines in a group style setting should contact LL's legal department for clarification PRIOR to doing anything of such a nature. Just because it's legal, doesn't mean LL has to allow it.

~Jessy

So did LL come in on the 23rd and shut them all down?

Or was it just a whimper of "self-regulation" ?