Regulating Second Life

The recent run on Second Life's Ginko bank, one of the virtual world's financial institutions, has prompted many residents to ponder whether their magical playland might not need some regulations after all. Their fears aren't fueled by lewd acts or incessant griefer attacks. Rather, they're about the one thing that truly matters: money. CFO magazine recently looked into the bank's failure as evidence that some form of outside oversight is needed to guard against fraud, money laundering, tax evasion, and incidents like Ginko and the recent theft from the World Stock Exchange. An excellent suggestion. But the article fails to deliver on its promise.

CFO fails to actually answer the question it poses, which is how to regulate Second Life. Sure, there are a few comments from Second Life creator Linden Lab; a spokesman says the company has no desire to police Second Life. An SEC spokesman makes some noncommittal remarks. Before concluding that Second Life regulation is up to Linden Lab, the CFO article briefly touches on the formation of the Second Life Exchange Commission, a supposedly grassroots movement charged by some observers with conflicts of interest.

Whatever the outcome, the kerfluffle over regulation exposes the reality of Second Life: It's all about the money. And once corporations wake up to the reality that there's no real money to be made, these arguments about regulation will be moot. As will Second Life itself.