The South Korean government has taken action to block the release of new games for earning (P2E) and demanded that existing games be removed from Google Play and the Apple App Store.
P2E games are becoming popular in the cryptocurrency industry. Typically, players must first purchase game items in the form of non-fungible tokens (NFTs) in order to play the game and receive in-game rewards. However, in South Korea, gambling prizes larger than a few dollars are prohibited.
The Gaming Management Committee (GMC) under the Ministry of Culture, Sports and Tourism on Monday asked major mobile app markets to ban all games that require in-app purchases before playing.
To combat the proliferation of what they see as speculative fundraising schemes, GMC has made it nearly impossible for P2E game developers to list their companies on the most popular mobile app stores.
While the government’s attempt to curb the growth of P2E games by entering app markets directly is a new development, South Korean game developers have been facing legal battles since April to offer P2E games for sale on local app stores. The main problem is that some game apps do not reach the minimum age required to be placed in the app stores.
A GMC official said the committee is only following Supreme Court precedent to ban P2E games from being age-restricted and listing. In a statement on Tuesday, the official said:
“It is prudent to prevent P2E games from receiving age ratings under current law because in-game cash rewards can be considered prizes.”
Prizes received from games in South Korea cannot exceed 10,000 won ($8.42) at a time.
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Fivestars for Klaytn P2E and NFT Marketplace were initially banned from local app stores due to lack of ratings, but in June the game’s development team won an injunction and the game was listed. The final decision on the legal status of the game is expected to set a legal precedent for other P2E games such as Infinite Breakthrough Three Kingdoms Reverse.
David Shin, head of global adoption at Klaytn, told Cointelegraph why he thinks regulators have taken a hard line on P2E games:
“Games with earnings and cryptocurrencies in general are of concern because of the foam in the market, driven by speculative activity. But once the foam subsides, governments around the world may be more receptive to regulating Web 3.0 as a permanent feature of the digital economy.”
GMC’s stance has negative implications for all P2E gaming applications, including a set of applications related to the two most popular games to date according to DappRadar: Axie Infinity and Splinterlands.