Stop the presses! Linden Lab is out with a (potential) solution for the crisis!
I was doing some slight corrections on a post announcing my company’s participation in a public exhibit at Portugal’s National Museum of Ancient Art, with an OpenSim-based reconstruction of Lisbon before the 1755 earthquake, when all of a sudden Damien Fate plurked that Linden Lab has just announced their Linden Dollar Authorized Reseller Program, both on the community blog as well as on the SL Wiki, with a link to the relevant legalese.
And yes, five resellers are already listed — among them, VirWox and AnsheX. Only ZoHa Islands seem to have announced that they’re back in business.
Now, before you start jumping and screaming “Hoorah for Linden Lab!”, it pays off to read the small print. This is a reseller programme, not an “authorisation” to allow running one’s own exchange. What this means is that the “authorised resellers” will be allowed to buy and sell L$ on the LindeX (presumably at lower fees than the common residents) and offer them for sale on their own exchanges. They do not allow them to directly buy and sell L$ to residents. So all transactions have to go through the LindeX.
At a stroke, LL solves two issues.
First, of course, the legal one. By ensuring that all transactions go through the LindeX, this means that they can track them down efficiently according to the FinCEN’s guidelines. The conditions and terms specify very clearly that the third-party exchanges have very strict rules on how they operate: they need to have a special avatar for these transactions and no other way to buy or sell L$, as well as forfeiting the right to get L$ from any other source but the LindeX. That’s the only way Linden Lab has to guarantee that these “resellers” are fully validated and that LL has a degree of control over what they’re doing. In effect, I guess that LL can somehow claim that these “resellers” are just like “normal avatars” — and fully tracked that way, fully identified, without any question of doubt about who they are and what they’re doing. And — most interestingly! — Linden Lab demands that “authorised resellers” are fully insured and make proof of having the required insurance.
This allegedly seems to be enough to placate the Feds. But it also means even more credibility of these exchanges in the eyes of the residents.
But obviously Linden Lab also makes sure that they get the extra money from the third-party exchanges — since now they will have to go through the LindeX, and, even if the fees that LL charges the third-party resellers is very low, it’s still a bit more than receiving nothing at all. It’s a win-win situation for LL: instead of getting zilch from the exchanges, now they get a few dollars as revenue.
LL also promises, on their blog post, to look into alternative payment gateways beyond PayPal and credit cards. Well, we’ll see about that; as said on my previous article, they have promising that since 2005 and done nothing about it. Still, this means that all residents who are unable to use PayPal or a credit card to buy L$ have, as of today, five official sources to get them, thus easing the pressure, stress, and anxiety of all those residents with tier to pay (and clothes to buy!) and no way to get L$ for their real money.
Of course, there is a catch.
None of these exchanges are allowed to pay residents anything in exchange for L$.
What this effectively means is that you can buy L$ from the resellers, but you cannot convert L$ back to US$ or any other currency using their services (see point 9. of their services). They apparently cannot even give back their users any “valuable” thing in return for their L$. Bummer!
It will be interesting to see how VirWox will handle this. One of their interesting features was for users to be able to buy L$ and exchange them for, say, OC$ to use on OpenSim grids using OC$. Or, well, exchanging L$ for Bitcoin (and vice-versa). Will the new terms mean that VirWox is forbidden to exchange L$ for anything else? There is enough ambiguity in the usage of the word “value”. VirWox also runs its own partner programme (i.e. VirWox resellers) which has to be terminated, under this agreement, at least for L$ transactions.
Still, I guess that VirWox might be more interested in keeping itself in the business of selling L$ to prospective customers who are not allowed to use credit cards and/or PayPal, than to provide a “cash-out” facility for L$.
And finally I’m also looking forward to see if LL is going to announce the end of “cashing-out” at the LindeX as well…
So is the crisis over? I think there is still a lot open to discuss. What do you think?