Mankun Pufa | Common Legal Risks and Prevention Suggestions for Crypto Assets Payment Communities

Industry Review: From Prosperity to Stricter Regulations In 2017, Lawyer Niu began to get involved with cryptocurrencies and joined several communities. At that time, the industry was entering a new explosive period, with various regulatory policies yet to be implemented, and the market was full of opportunities. The content of the communities was also diverse, with some popularizing the underlying knowledge of blockchain, some teaching "brick-moving" arbitrage, and others directly teaching people how to buy and sell cryptocurrencies. Indeed, these communities provided many newcomers with learning opportunities, helping them improve their investment skills. Many people transformed from novices into seasoned "leeks" in such an environment. However, in the blink of an eye, that period seems to have become history, and the industry environment has changed drastically. With domestic regulations tightening, many once-flourishing figures in the crypto space have gradually retreated, and community activity levels have significantly declined. Nevertheless, there are still many communities in operation, with some offering investment advice, recommending projects, and even teaching "haircut" strategies and methods for boosting meme coins. However, under the current regulatory policies, such activities carry extremely high legal risks and may even lead to criminal liability. The "Notice on Further Preventing and Dealing with Risks Related to Speculation in Virtual Currency Trading" issued in 2021 clearly prohibits the provision of "information intermediary" services for virtual currency trading. According to legal interpretation, this behavior refers to providing information publishing, display, promotion, consultation, and other services for buying, selling, and trading of virtual currencies (such as Bitcoin, Ethereum, USDT, etc.) through platforms, communities, websites, apps, or other channels. Such behaviors do not directly participate in virtual currency trading, but they provide a convenient information transmission and trading facilitation environment for both parties in the transaction, and therefore are included. It is not difficult to see that any consulting services involving cryptocurrency transactions may fall under the prohibited scope. In other words, many training, advice, and information sharing related to virtual currencies may touch upon regulatory red lines. Of course, you might wonder why these communities are still operating, and they don't seem to have a problem. In fact, the reason why many things have not happened for the time being is not because there are no problems in themselves, but because contradictions have not yet broken out and disputes have not yet arisen. If a member of a community loses money in the process of investing, even if it is because of a bad decision made by themselves, the problem can be exposed in the event of a controversy. At this time, it is easy to involve the above-mentioned legal risks. In this context, whether a paid community that teaches people to invest in cryptocurrencies can continue to operate, and what kind of model it should adopt to ensure that its operational model does not violate current laws, are topics worth discussing and researching. The legality and sustainability of this business mainly depend on the content of the business, the methods of promotion, and whether it touches on regulatory red lines. This article will discuss these issues from three perspectives: legal risks, business models, and compliance recommendations. Legal risk For the business of charging to teach people how to buy and sell virtual currencies, the risks are mainly reflected in: Content Risk: If the training content is limited to technical analysis, market theory, risk warnings, and basic knowledge dissemination, and is clearly marked "for learning reference only, not constituting investment advice," it can generally be considered as education and training; however, if the course includes specific buy/sell recommendations, profit forecasts, or directly induces students to trade, it may be deemed as providing illegal investment advice or manipulating the market, thus violating financial regulatory provisions. Promotional and Marketing Risks: During the promotional process, if profits are exaggerated, high returns are promised, or customers are attracted using false information, it may constitute false advertising, mislead consumers, and even involve suspected pyramid schemes or illegal fundraising, significantly increasing risks. Business boundaries are blurred: If training services are confused with actual trading operations, signal services, or behaviors such as "call orders," regulatory authorities may easily perceive that they are providing financial investment services in disguise, which could lead to legal investigation. Business model path The pure educational mode can obtain a certain space. If training institutions strictly position their business as "knowledge popularization and skill training," focusing on teaching theoretical knowledge, tool usage, technical analysis, etc., and continuously emphasize risk warnings in their promotions and actual courses, while avoiding the provision of investment advice, then there may be a certain legal space for survival. It is important to emphasize that the content of the training business must have strict boundaries, limited to general and educational training. Because once the business content involves practical advice on token selection, trading timing, etc., it may still be deemed as disguised inducement to invest, violating regulatory requirements. Continuously adjust in line with regulatory requirements In light of the current strict crackdown measures by China on virtual currency trading itself, even training services may be affected. Therefore, training institutions need to closely monitor regulatory dynamics and timely adjust their business models and promotional language. In fact, some institutions have attempted to set up companies in Hong Kong or overseas to circumvent domestic regulations, but this involves cross-border legal issues, and the compliance costs will also be higher. Mankun Lawyer Compliance Advice To reduce legal risks and standardize operations, it is recommended to take the following measures: Clarify business positioning and content boundaries Position the course as "knowledge dissemination" and "skill training", strictly prohibiting the provision of specific buying and selling advice or personalized investment guidance. Ensure that the course promotion, contracts, and teaching content explicitly state that they do not constitute investment advice. Improve risk warnings and disclaimers The course should detail the high volatility and legal risks associated with virtual currency trading, and repeatedly remind students that "investment carries risks, and one must be cautious when entering the market." Include a disclaimer clause in the contract, clearly stating that the training institution is not responsible for the trading results of the students. Compliance of charging model Fiat settlement: Only RMB payments are accepted, and a written agreement must be signed to clarify the scope of services (such as technical training, industry information). Promising returns is strictly prohibited. Avoid virtual currency payments: The use of cryptocurrencies such as USDT for payments is prohibited to prevent legal risks due to issues with the source of funds. Standardized Promotion and Marketing Prohibit the use of exaggerated profit claims, guaranteed returns, and similar statements; ensure that promotional information is truthful and objective. Establish an internal review system to conduct legal compliance checks on all promotional materials and consult professional lawyers when necessary. Internal Compliance Management Establish a compliance management system, provide regular legal training for employees, and ensure that all staff understand relevant regulations and supervisory requirements. Appoint a compliance officer to conduct risk assessments of business activities and make timely adjustments. Continuously pay attention to policy changes Regularly track the latest policies and notifications from regulatory authorities, and adjust the business model in a timely manner. If policies tighten, consider suspending or adjusting the business model; if policies loosen, appropriate business expansion can be undertaken. User Management and Content Review Real Name Authentication (KYC): Conduct identity verification for learners to prevent anonymous users from using training content for illegal transactions. Sensitive word filtering: Set keywords such as "delegated investment", "contract", and "arbitrage" for automatic filtering, and regularly clean up violations. Conclusion In the current strict regulatory environment, charging for cryptocurrency investment education poses high legal risks, primarily due to the direct conflict between its business model and regulatory policies. To operate legally, it is essential to ensure that the training content does not involve practical trading operations and to establish a comprehensive risk control system. If you want to grow in the long term, it is advisable to position the training business as technical education or compliance consulting, and maintain a constant focus on regulatory dynamics. Regular consultation with a professional lawyer for compliance assessment is key to ensuring the sustainable development of your business. / END. Author of this article: Lawyer Niu Xiaojing