The Reality of Virtual Economies

In-game money is beginning to attract real-world tax attention. From the article:

Second Life, for example, was specifically designed by San Francisco-based Linden Lab to have a free-flowing market economy. Its internal currency, the Linden dollar, can be converted into U.S. dollars through an open currency exchange, making it effectively “real” money.

And it is a lot of money:

The increasing size and public profile of virtual economies, the largest of which have millions of users and gross domestic products that rival those of small countries, have made them increasingly difficult for lawmakers and regulators to ignore.

Additionally, there is this twist:

“You could argue that to a certain degree the law has fallen (behind) because you can have a virtual asset and virtual capital gains, but there’s no mechanism by which you’re taxed on this stuff”

What possibilities does this open up? Ginko Financial is already taking advantage of a virtual economy:

According to Ginko, it has more than L$61 million (US$220,000) on deposit from nearly 10,000 account holders, all of whom earn 0.10 percent interest a day – equal to about 44 percent a year.

Should Credit Unions develop in-game extensions? How about depositing money into a in-game branch and withdrawing it at a real, physical branch?

You can get more news about second life, including the exchange rate between the Linden Dollar and the US Dollar here: http://secondlife.reuters.com/