With the booming development of blockchain technology, Web3 is no longer just a technical concept, it is gradually shaping a new Internet ecology and business model. As of July 4, 2024, Coinmarketcap shows that the total market value of cryptocurrencies has exceeded 2 trillion US dollars, and many popular tracks, such as MEMECoin, Inscription, BTC L2, TON, etc., have attracted the enthusiastic attention of a large number of investors and developers.

Due to the high threshold of Web3, the more people try to enter Web3, the more demand there is for Web3 knowledge learning, which directly promotes the expansion of the knowledge payment market. Whether it is user education courses provided by Web3 projects themselves, or video/graphic courses on development, investment, etc. produced by KOLs, or educational crypto projects such as CZ, they are all growing exponentially on the global Internet.

The most typical data can be seen on video platforms, such as Youtube abroad and Bilibili in China. Not only are there many uploaders who upload Web3 courses, but the playback volume of tutorial videos is also very impressive (the highest video playback volume is in the millions), which fully demonstrates that Web3 knowledge payment, as an emerging force in the field of education and training, is gradually becoming the focus of attention in my country and even the world. At the same time, these courses range from the most basic blockchain knowledge to advanced programming skills, covering science popularization, blockchain technology and even advanced virtual currency investment.

However, the development of the Web3 knowledge payment market is not without challenges - the market demand is large, and the compliance risks faced by practitioners are equally significant, especially the legal issues related to cryptocurrency in my country's judicial environment. In this context, it is particularly important to understand these legal challenges and find appropriate compliance strategies. Next, Attorney Mankiw will discuss in depth the current status of the Web3 knowledge payment industry and the main legal compliance challenges it faces.

What does Web3 knowledge payment do?

In terms of Web3 knowledge payment, the most common content exists in online form, including but not limited to:

• Live courses: allow real-time interaction, provide an environment for instant answers and discussions, and are particularly popular with learners who seek immediate feedback.

• Video courses: Recorded video tutorials allow users to study according to their own schedule, which is the most common way to learn online.

• Text and graphic tutorials: Provided in the form of articles, blogs or e-books, they are easy to read and digest quickly.

A small number of Web3 knowledge payment practitioners will choose to build their own platforms to provide exclusive courses. Although this method has a high degree of freedom, it needs to comply with strict telecommunications business regulations, such as obtaining the corresponding ICP license.

Of course, in addition to online courses, there are also some offline education and training. The most common are blockchain-related courses offered by some universities or research institutions. For example, the colleges under Peking University and Tsinghua University have related Web3 courses/training.

Although the Web3 knowledge payment market has huge opportunities, practitioners still need to maintain the foresight and practicality of educational products in a rapidly changing market, and must also ensure that all educational activities and content comply with local education and relevant laws and regulations to ensure the legality and sustainability of the business.

What content cannot be taught?

In the field of Web3 paid knowledge, the legitimacy of the content is particularly critical. Web3 paid knowledge content can be roughly divided into two types. One is more technical, mainly involving program development, code usage, etc. The other is mainly investment. Practitioners will disassemble their investment steps and share investment strategies in the course.

From a compliance perspective, educational content should avoid involving misleading marketing or providing illegal financial advice, especially in mainland China. On August 9, 2022, the Cyberspace Administration of China issued the "Cyberspace Administration of China Concentrated Rectification of Virtual Currency Speculation Chaos" on its official website, which mentioned that since 2022, the Cyberspace Administration of China has continuously cleaned up and dealt with a number of illegal and illegal information, accounts and websites that promote and speculate virtual currencies, closed 12,000 illegal user accounts, and cleaned up more than 51,000 illegal information.

In addition, the Cyberspace Administration of China also instructed local cyberspace administration departments to interview more than 500 business entities involved in the promotion and speculation of virtual currencies, requiring a comprehensive cleanup of information content promoting and speculating on virtual currency transactions. 105 website platforms that specifically promote virtual currency marketing and publish tutorials explaining cross-border speculation and virtual currency "mining" were closed in accordance with the law.

At the same time, the promotion of Web3 investment-related content must also consider avoiding unauthorized securities issuance, unlicensed investment advice, etc. For example, on June 20, 2024, the Eastern District Court of Hong Kong ruled that the unlicensed Huang’s sharing of securities investment information and advice in the TG group violated the Securities and Futures Ordinance and fined him.

What can’t be done?

The Web3 knowledge payment industry usually promotes its Web3 courses or training through advertising, social media and commission promotion. Compared with advertising and social media promotion, the operation mode of commission promotion is slightly different. For example, a well-known Web3 developer community in China allows users who publish courses to set the rebate ratio. If someone forwards the course link and facilitates subsequent transactions, the forwarder can get a certain percentage of the rebate.

*A Web3 community’s interface for setting up rebates

However, it is worth noting that among the above three behavior modes, commission promotion needs to pay attention to the setting of the rebate level because of the "distribution" model. If you are not careful, it may cause pyramid selling. For example, in the case of (2021) Jin 05 Criminal Final No. 33, the Jincheng Intermediate People's Court of Shanxi Province held that in early 2013, Yi Mou 1 set up "Zhuoxun.com". In the name of providing "Internet + Smart Education" service activities, they recruited people to develop downlines. They used Zhuoxun.com to operate various pyramid selling models, requiring participants to pay an entry fee and obtain Zhuoxun.com ordinary card, gold card, diamond card and VIP card membership respectively. The number of developed personnel and the membership fees collected were used as the basis for rebates, and the membership management level was divided into several different roles from low to high. Both direct and indirect recommendations can obtain referral rewards of different proportions of the new member registration fee. The number of people organized and led by the pyramid selling activities was more than 30 and the level was more than three levels, which constituted the crime of organizing and leading pyramid selling activities.

At the same time, in order to attract audiences, some courses or practitioners will consciously use exaggerated titles or some false but beautiful investment data in their promotions to attract attention. However, no matter in which country or region, the content of advertising activities must be true and legal, and no false or misleading propaganda is allowed. For example, according to China's Anti-Unfair Competition Law, operators shall not make false propaganda about the quality and functions of their products to deceive or mislead consumers. Consumers should be clearly informed of the quality of the courses and service commitments to avoid legal liability caused by false propaganda.

Other compliance challenges

Of course, in addition to the above two crucial links, Web3 knowledge payment practitioners should also pay attention to the following two compliance issues:

1. Intellectual property disputes

Web3 paid knowledge involves the creation and distribution of a large amount of original content. However, the current situation is often that a large number of high-quality original articles are used through plagiarism, AI videos, etc., and eventually become profit tools for some Web3 paid knowledge practitioners. In his daily article creation and push, lawyer Mankiw is also troubled by this. At the same time, a common phenomenon in the Web3 industry is that some practitioners will use "transfer" as a way to use other people's original articles - some will mark the original author, and others will translate the English content.

According to the Copyright Law and related international treaties, such as the WTO's TRIPS Agreement, protecting intellectual property rights is an international consensus. Therefore, the Web3 knowledge payment industry must also ensure that the tutorial content does not infringe on the copyright of others. At the same time, the content generated by the platform itself should also be protected. In China, according to the Copyright Law of the People's Republic of China, practitioners must obtain appropriate authorization for all published content and properly handle infringement issues.

2. Infringement of Consumer Rights

Whether it is the traditional education and training industry or Web3 knowledge payment, consumers may often face the situation of selling dog meat under the guise of sheep meat. Lawyer Mankiw has encountered that the sharing topic is clearly industry insights and investment skills, but as you listen, it turns into promoting a certain virtual currency, your own project, or recommending copy trading, commission sharing, etc. Some courses are free, but once it involves paid courses, it is often an infringement of consumer rights.

Consumer protection regulations also apply to the Web3 knowledge payment industry. According to the Consumer Protection Law, service providers should guarantee the quality of services and should not defraud or mislead consumers. Regarding course quality and service commitments, service providers should clearly inform consumers of the specific content, fees, refund policies and consumer rights protection measures of the courses. This helps build consumer trust and reduce legal disputes caused by misunderstandings of service content.

Attorney Mankiw recommends

Among the various legal challenges faced by the Web3 knowledge payment industry, compliance advice can not only help businesses avoid risks, but is also the key to ensuring sustainable development. The following are some specific suggestions made by Attorney Mankiw in response to the above issues and challenges:

1. Teach legal content

• Ensure content is legal: When creating and sharing paid knowledge content in mainland China, it is important to avoid illegal activities such as virtual currency trading instructions, especially in countries like China where cryptocurrency trading is strictly prohibited. Web3 paid knowledge practitioners must be careful not to publish content that may violate these regulations and ensure that all information complies with national laws and regulations.

• Licensed and compliant courses: In Hong Kong, practitioners who provide Web3 investment-related courses need to strictly abide by the regulations of the Hong Kong Securities and Futures Commission to ensure the legality of their course content. Especially when it comes to investment advice, Web3 knowledge payment practitioners must hold the corresponding license. This is because the Hong Kong Securities and Futures Commission has clear regulatory requirements for the provision of securities investment advice. Providing such advice without authorization may be considered an illegal act, which may result in serious consequences such as fines or license revocation. In addition, the content of courses involving token issuance and cryptocurrency investment must also comply with Hong Kong's legal framework on digital assets to avoid inducing or misleading investors to engage in illegal or unregulated financial activities.

2. Carry out compliant promotion

• Legal advertising practices: When conducting marketing and advertising, all advertising and promotion activities should comply with the Advertising Law and the Anti-Unfair Competition Law, especially in terms of statements and promises, they should be truthful and avoid using misleading or exaggerated language, such as promises of guaranteed returns on investment. Promotional materials should be truthful and clear, without any vague statements or statements guaranteeing a specific return on investment.

  Transparent commission model: Commission promotion needs to be carefully designed to avoid legal risks, especially to prevent potential pyramid schemes. The key is to clarify the number and proportion of commission returns to ensure that a pyramid structure is not formed; to sign clear cooperation agreements with partners and record the terms of cooperation in detail; to make the promotion policy public and transparent to the public so that consumers can clearly understand the details of participation; and to regularly monitor and audit the implementation of promotion activities to check whether there are any illegal operations such as false advertising or illegal fundraising.

Other compliance recommendations

• Copyright clearance and marking: Establish a systematic copyright management process, including copyright verification and archiving. Ensure that all multimedia materials (pictures, texts, videos, audio, etc.) used have been formally authorized or meet the standards of public domain/fair use. Use copyright management software to track and manage the copyright information of all materials.

• Intellectual Property Education: Provide regular intellectual property-related training to employees and content creators to enhance their awareness of copyright law and avoid inadvertent infringement of others’ intellectual property rights.

• Clarity of terms of service: Before users register or purchase courses, provide a complete text of the terms of service, clarifying the course content, price, refund policy and user rights. The terms should be written in easy-to-understand language, avoiding obscure legal terms, and ensuring that users can easily understand their rights and obligations.

• Online interactive platform: Set up online customer service or interactive platform to answer users’ questions about the terms of service, improve service transparency and user satisfaction.

• Quality control mechanism: Establish a strict course quality control process, including course content review, teacher qualification verification and user feedback system. Ensure that all course content meets education industry standards and is provided by qualified teachers.

By implementing the above suggestions, Web3 knowledge payment practitioners can not only improve their own legal compliance, but also build consumer trust and promote the long-term healthy development of their business.

Conclusion

The prosperity of Web3 has driven the demand for Web3 knowledge payment, and has also attracted many people to actively participate in the Web3 knowledge payment track. Some practitioners are busy using eye-catching titles to attract traffic, while others want to use investment strategies to reap profits. However, there are also some practitioners who are down-to-earth in doing courses and stick to their original intentions in this track. How should Web3 knowledge payment be done? After reading this analysis by lawyer Mankiw, I hope everyone can gain something.