Is charging people to invest in virtual currency a legal and good business?

Author: Lawyer Liu Honglin; Source: Mankiw Blockchain Legal Services

Recently, Lawyer Liu Honglin of Mankiw Law Firm found that there are many more friends in the circle of friends who have emerged from the traditional private equity and public offering industries and started to do business in the cryptocurrency circle's education and training and paid communities. The reason is not difficult to understand. For these people who have emerged from the traditional financial services industry, they found that providing investment advice and financial consulting for virtual currencies to customers 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 accumulation of 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.

Behind this phenomenon, although it seems to be a service innovation, it also hides potential legal risks. Below, we will analyze the legal risks behind such services and how to prevent them from the perspective of legal compliance.

If you want to do virtual currency investment consulting, it is recommended not to use words such as "guaranteed profit" and "stable profit" at every turn. It is better to "speak frankly" when sharing such public investment "achievements". Don't be too "hard" when posting screenshots of your earnings on your Moments. Mark "investment is risky" so that people can see it 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 such a key clause must be written: investment advice is for reference only, and the corresponding benefits and risks are also borne by the customer. Don't fall into the "trap" of direct investment.

If some friends really intend to do this as a long-term business, then you might as well consider setting up a company. The most common way is to set up a company in Hong Kong, China, so that the education and training business can be done through the company's identity, and the compliance can be more guaranteed. However, although Hong Kong's current policy on virtual currency business is friendly, the premise is that friends must ensure that they are really doing education and training, rather than making investment advice under the banner of training, otherwise they may also touch Hong Kong's financial regulations, which are much more stringent than those in mainland China.