The so called Real World Trading (RWT), the exchange of virtual online gaming currencies and real world currencies is a controversial issue among online gamers. Many argue that the online fantasy worlds should be a place where people can create their avatars and mind their own business in a world where everybody starts out equal and real life weath does not help. A loud mob of players object to RWT, making it the politically correct stance by a gaming company to ban it completely.
Hence, RWT is banned in many games, most noticeably the biggest one of them all; World of Warcraft. Another game that has been fighting RWT is Runescape. They claim that RWT is the root source of scams and cheats inside the game. However cheats and scams were always a part of online games, long before RWT started to emerge. Some games, like Second Life, embraces the RWT and makes it a core idea of the whole gaming experience.
But do games benefit or suffer from allowing RWT? Nobody can say for sure, but I found some circumstancial evidence that the banning of RWT does not really increase the popularity of a game.

As seen on the search term statistics, eventhough nothing much can be proven by these numbers, it seems likely that Runescape lost popularity from imposing balanced trade in order to stop real world trading. The upgrade was put in place the 2nd of January 2008 and you can clearly see the increase in searches prior and the huge decline still taking place at the time of writing this.
I am, since I live off of the sales of virtual currencies, of course biased but I doubt that regulations like the ones in Runescape will worl very well. People are still selling in that game and also of course in World of Warcraft. Below is the text we posted on RPGStash.com when the balanced trade was made public by Jagex.
In response to Jagex take on Real World TradingBelow is our official post on the website after Jagex imposed the balanced trade limits to Runescape.
The official news is that items & gold will only be possible to transfer through balanced trades in the future. This limitation is already in effect on accounts created after December the 10th but older accounts will be subject to this as well in the beginning of January. This means that there are only 3 weeks left before we remove items and gold sales from our Runescape shop. After that you will have to grind the game like a bot if you want to accumulate any wealth. Which is highly ironic, considering that bots are the primary reason why Jagex are taking these measures in the first place.
They also have the audacity to brand all Real World Traders as thieves and boters, which is totally ludicrous. We can only speak for ourselves on this matter but we want to make it perfectly clear that our suppliers have always been and will always be legitimate players that choose to sell some of the surplus they are hoarding to us. We bring this stuff that has left the market back into the game; and this is done at nobody''s expense. We don't use bots, macros or other hacks and we never steal from other players. And it is imperative to point out that most players who cheat and/or steal are not in it for the money. It is the act of cheating or stealing that makes them tick.