Big banking news from Second Life
Second Life issued a statement today effectively banning in-world banking.
“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.”
After the collapse of Ginko Financial last year, many residents of Second Life began raising concerns about legalities of in-world banking. It’s a shame that Second Life couldn’t come up with a way to make this work. They do make provisions for organizations that have valid financial institutions charters or the applicable governmental registration, but as their last paragraph says, “We will not apply this policy to companies who submit a registration statement, charter, or other applicable license from a governing regulatory authority, or who are merely conducting marketing or education, but not accepting payments.”
So what is there left for FI’s to do in Second Life that could actually have a real world impact?
Perhaps this is the time where CUs need to get involved and focus on helping people in SL just as they do in the real world. Though I’m not real familiar with SL, “helping people” could mean hosting financial-related webinars, talking to people about how to plan for a successful financial future, or just educating people on the difference between banks and CUs.
In the real world, CUs do more than just help people bank, so why not take that “community involvement” role into Second Life?
Also, sidebar, is it feasible to propose a CU with a field of membership made up of Second Life users? (Based on Tim’s thoughts here:http://www.currencymarketing.ca/scary-big-idea-1-affinity-positioning-for-credit-unions)
Likely not. This is from the NCUA Chartering and Field of Membership Manual:
Associations based primarily on a client-customer relationship do not meet associational common bond requirements. However, having an
incidental client-customer relationship does not preclude an associational charter as long as the associational common bond requirements are met. For example, a fraternal association that offers insurance, which is not a condition of membership, may qualify as a valid
associational common bond.
Here’s a link to the manual:
http://www.ncua.gov/RegulationsOpinionsLaws/charter_manual/2003CharteringandFOMManual.pdf
I think the SL statement can be edited down this way: “We will not apply this policy to companies who…[are] not accepting payments.”
So basically, I think a bank or credit union could conduct basic banking activities in SL as long as it is transacting Linden dollars. I’m interpreting their clause as this: “We’ll authorize banks and credit unions to do business as Second Life financial institutions, but not unless they actually plan to operate a business in SL as such.”
You don’t get the ‘certificate’ (or whatever) from SL just because you have an offline license. You actually have to set up operations.
Interesting interpretation Jeffry. A lot remains to be solved, and as usual, you can’t get info out of LL
The way they present that policy is pretty ambiguous. So, as long as you have a charter or you are not accepting payments and are there to market, or educate you’re alright?
@mike Second Life CU…I like it. Don’t know if it would fly with NCUA, but it would be cool to see that community get its own personal financial institution. People could take out loans in $L to start their own SL small business!
@Jeffry – I think you are right. As long as you don’t take or make payments, you can still have an FI in SL, but you won’t be able to do any monetary transactions.
@Compliance Guy – Do you think the NCUA would let some get away with adding an association like that as a SEG? You have to belong to the SL Advocation, pay your dues, and you can join the credit union? The common joke about the niche credit unions is could the NRA, NASCAR, and MADD each have a credit union?