Arguments were strong in the back waters of the SLDEV and Metanomics groups over Linden Labs new policy. e.g. This post…. odd I remember covering in Revenews’ long ago and it didn’t ripple.

Linden Labs says:

Please read this if you operate, or have transferred L$ to, an in-world “bank” or financial company.

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.

Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.

Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.

But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy. At least as important, the legal and regulatory framework of these non-chartered, unregistered banks is unclear, i.e., what their duties are when they offer “interest” or “investments.”

There is no workable alternative. The so-called banks are not operated, overseen or insured by Linden Lab, nor can we predict which will fail or when. And Linden Lab isn’t, and can’t start acting as, a banking regulator.

I did converse with a representative of First Meta Card who I have had some conversations before (mostly over RPG’s and not banking) and she provided me this statement via note card. (no mod I think).

First Meta comment on Linden Lab’s New Policy Regarding In-World “Banks”

9 January 2008

First Meta fully supports regulation of financial services activity in the virtual economy. We agree with the statement by Linden Lab that in-world “banks…offering unsustainably high interest rates…are in most cases doomed to collapse – leaving upset ‘depositors’ with nothing to show for their investments.” We believe that the removal of non-credible players from the financial services sector of Second Life’s economy will benefit all of its participants.

First Meta’s approach differs radically from the “banks” as described by Linden Lab. We offer a full range of financial services focusing on credit products, including MetaCard(TM), backed by a robust real-world system, run by professionals with real-world financial expertise, and focusing on providing customers with transparency and accountability. We are a real-world company, registered in Singapore, one of the financial centers of the world. First Meta’s operations are supported by the Singapore government and we are funded by real-world private investors, not by our customer’s deposits.

We are in discussions with Linden Lab about our MetaSavings(TM) accounts. OurMetaSavings (TM) deposits are more than 100% funded, which means that no First Meta customer will lose any money as a result of the new policy.

Since our MetaCard(TM) does not “offer interest or a rate of return on L$ invested or deposited”, it should not be affected by this new regulation.

As First Meta’s business is not dependent on savings accounts or other investment instruments which are addressed by the new policy, we believe that the new policy will not have any adverse effects on our company. Insofar as the new policy strengthens the virtual economy, we believe this will actually benefit First Meta. As the leading provider of financial services in virtual economies, First Meta will continue to provide a trusted partner for our customers.

Sincerely,
Douglas Abrams (JP Mougin)
Chief Executive Officer
First Meta Pte. Ltd.

It does meet one of my acid tests. Douglas Abrams is a real name, and only uses his avatar name INWORLD. Also Lindens aren’t the only “fiat currency” they will be chasing I detect…but more to come! Monolith 8 is kicking off…

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