For those of you who don't play Second Life, it may come as a surprise that the virtual world is still turning. But it is, and there's still drama going down over—you guessed it—money handling within the "game." Second Life operator Linden Lab is hoping to head off some of that drama by instituting a ban on virtual banks that aren't government-sanctioned in real life. The company said in a blog post this week that after reviewing resident complaints, in-world banking activities, and the law, the move is in the best interests of its users.

A number of virtual banks have popped up within Second Life, and they work the same way that real banks do—they promise appealing interest rates to Second Life residents willing to hand over their Linden dollars, among other things. Since Linden dollars can be translated into real-world dollars, the individuals running the "banks" presumably deposited the cash into their own (real) banks in order to grow that interest. But residents started getting burned by banks not being able to live up to their promises. One bank, Ginko Financial, ended up folding in August, taking all of its customers' money with it. Since then, a number of other banks have defaulted on their promises, too.

Since the banks aren't official (and therefore are not FDIC insured like a real bank would be), Second Life residents had no recourse and were out all of their hard-earned cash. Normally, Linden Lab would stay out of it—residents are free to screw themselves over however they please within the virtual world. But the company said that it believes these banks introduce "unique and substantial risks" to the game by offering unsustainably high interest rates, and are doomed to collapse.

"As these activities grow, they become more likely to lead to destabilization of the virtual economy," the blog posting reads. "At least as important, the legal and regulatory framework of these non-chartered, unregistered banks is unclear, i.e., what their duties are when they offer 'interest' or 'investments.'"

Therefore, as of January 22, Linden Lab will be removing all objects that are related to in-world banking. Until then, the company hopes that the banks will settle their debts with residents as best they can, but if they are caught trying to operate after January 22, they will be punished by possible suspension, termination of accounts, and (*gasp*) loss of land. Legitimate banks that provide a government registration statement or financial institution charter will be allowed to continue doing business, as will entities conducting marketing or education.

This is not the first time Linden Lab has stepped in and banned questionable activity relating to money. In July of last year, gambling was banned in the virtual world, which some believed was related to an FBI investigation into casinos in Second Life. Because of the cloudy nature of the law when it came to gambling with Linden dollars, the company decided to head things off at the pass with the ban.

For the next couple of weeks, those in-world banks could face new problems while everyone rushes to get their money out. Like the (real life) stock market crash of the 1920s, Second Life residents have been gathering en masse at their virtual financial institutions to figure out what's going on.

It's times like these when we're glad none of us at the Ars Orbiting HQ plays Second Life anymore.