Traditional financial practitioners turn to the crypto world
Recently, Liu Honglin, an attorney at Mankiw Law Firm, found that many of his friends who had come out of the traditional private equity and public equity industries had started to engage in educational training and paid community business in the cryptocurrency circle. The reason is not difficult to understand. For these people who have come out of the traditional financial services industry, they found that providing investment advice and financial consulting for virtual currencies to clients is essentially no different from investment training in the traditional financial market. After all, the K-line charts, sentiment analysis, information tracking, etc. in virtual currency investment are similar to those in the traditional stock market, so the migration of investment skills seems to be a natural thing.
However, after these traditional financial practitioners entered the cryptocurrency circle, they found that it was not easy to do business with "old leeks" - after all, the resources and information accumulated by old players in the cryptocurrency circle are difficult for them to surpass. Therefore, more people began to turn their attention to the user group of Web2, using their information and skills advantages in the Web3 industry to provide virtual currency financial management training courses to these Web2 customers, with course fees starting from several thousand yuan. After completing the course, customers can also choose higher-priced services, such as joining private communities to obtain investment advice on secondary market buying and selling points and primary market potential projects. Consultants often share their "successful records" in Moments to attract more customers, but if the investment fails, some people will simply refund the money. Such a business model has become more and more common in the cryptocurrency circle.
Although this phenomenon seems to be a service innovation, it also hides potential legal risks. Below, we will analyze the legal risks behind this type of service and how to prevent them from the perspective of legal compliance.
Don’t turn your training business into a cryptocurrency trading coach
For well-known reasons, in mainland China, virtual currency investment consulting faces far more legal challenges than the general financial industry. China has repeatedly made it clear that virtual currencies are not legal tender, and has introduced strict supervision of virtual currency transactions. The "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Transaction Speculation" issued in 2021 completely prohibits domestic financial institutions and payment institutions from providing services for virtual currency transactions. This policy essentially restricts the legality of domestic virtual currency investment consulting and training.
For consultants who provide virtual currency investment advice to clients, these policies mean that they may always face risks in terms of compliance. If consultants recommend "buy or sell" virtual currencies to clients without obtaining financial business licenses, or even recommend speculative projects in the primary market, they will touch the red line of China's management of financial activities. Such activities are likely to be regarded as illegal investments or fraud. Once clients suffer losses and complain, consultants may face administrative penalties or even criminal liability.
Another situation is that many consultants in this industry operate directly as individuals to save trouble, without setting up a company at all. It is indeed convenient to operate publicity and down payment in an individual name, but it also reduces risk isolation. Once the client has a dispute over the investment service or results, the consultant will have to face claims and lawsuits directly in his or her personal capacity, without even a company as a "shield". More importantly, operating in an individual capacity may also involve the issue of illegal operation. Once it is determined to be illegal operation, the consequences are not ordinary troubles.
In addition, many consultants will directly accept virtual currencies from clients, such as USDT, in order to pay less tax or avoid fund tracking. However, from the perspective of consumers, using virtual currencies such as USDT to pay also buries a lot of hidden dangers: once a dispute arises, domestic legal support is relatively limited, because USDT is not considered "money" under the existing regulatory policies in mainland China. Therefore, virtual currency payments are a matter of opinion for both parties, and consumers should pay special attention to whether they can bear such risks.
Several practical legal risk control suggestions
If you want to seek advice on virtual currency investment, it is recommended that you do not use words like "guaranteed profit" or "stable profit" all the time. When sharing such public investment "achievements", it is best to be honest. When posting screenshots of earnings on WeChat Moments, do not be too "hard". Mark "investment is risky" so that people can see clearly and avoid disputes later. If the training fee or coaching fee is relatively high, it is recommended that both parties sign a formal contract, especially the following key clause: investment advice is for reference only, and the corresponding income and risks are borne by the client himself. Do not fall into the "trap" of direct investment on behalf of others.
If you are planning to do this as a long-term business, you may want to consider setting up a company. The most common way is to set up a company in Hong Kong, China, so that you can do education and training business through the company identity, which can better ensure compliance. However, although Hong Kong is currently friendly to virtual currency business, the premise is that you must ensure that you are really doing education and training, rather than making investment advice under the banner of training. Otherwise, you may still violate Hong Kong's financial regulations, which are much stricter than those in mainland China.
As for the usual private domain communities and course delivery, direct "calling orders" is basically not done if it can be avoided. The community allows it to play the role of sharing and communication, providing information and market dynamics. The same is true for courses. Try not to directly say "how much this coin can rise" or "when to buy it", but talk about the use of tools and market analysis, and you will definitely not be caught in the "weakness". Let customers understand that you are providing knowledge, not directly giving "financial advice", so that everyone knows it and the compliance risk will be much smaller. Through these pragmatic risk control strategies, you can not only protect yourself and avoid legal risks, but also make customers more trusting and confident in the service. Although making money is fun for a while, it is really fun to ensure that you can make money all the time.
This article is the opinion of the PANews columnist, does not represent the position of PANews, and does not bear any legal responsibility. The article and opinions do not constitute investment advice.
