Author: Liu Honglin
Over the past few years, Lawyer Honglin has encountered many friends interested in the Web3 industry through offline sharing sessions and closed-door courses. Almost every exchange would inevitably lead someone to ask me a highly similar question midway or at the end:
Under the current legal and regulatory framework in mainland China, if one does not want to cross red lines, what can Web3 entrepreneurs actually do?
This question is truly a soul-searching one. It directly hits the real situation of many Web3 entrepreneurs in mainland China. On one hand, we see the rapid evolution of DeFi, NFTs, stablecoins, RWA, and AI+Crypto in overseas markets; on the other hand, we have to face the regulatory reality in mainland China: the core Web3 narrative centered around financial innovation and token mechanisms does not have direct room for replication and implementation back in China.
It is precisely this surreal contrast—"visibly recognizing that Web3 is undoubtedly the future, but looking down and seemingly finding nothing feasible"—that repeatedly leads everyone to doubt and repeatedly ask the same question: In what ways can Web3 continue to develop without touching legal red lines?
To save everyone's mobile data fees, let's put the conclusion upfront: In mainland China, Web3 entrepreneurship is not "impossible," but it cannot revolve around "issuing tokens, speculating on tokens, fundraising, or trading." Once you completely strip these four actions from your business model, the remaining space becomes much clearer.
First, there is still realistic space for purely technical and infrastructure-layer Web3.
If you treat blockchain as a "new type of distributed database, collaboration tool, or system architecture" rather than a financial tool, it is not negated in mainland China. Whether it's consortium chains, permissioned chains, or solutions under the names of "blockchain technology services," "distributed ledger systems," or "trusted data infrastructure," they essentially fall under the category of information technology services.
At this level, what entrepreneurs can do is very specific and very traditional: building systems for enterprises, platforms for governments, and middleware for industries. Data rights confirmation, data circulation,存证溯源 (evidence storage and traceability), cross-entity collaboration, supply chain coordination, judicial存证 (judicial evidence storage), administrative存证 (administrative evidence storage)—these scenarios themselves are not new, but using blockchain methods to address them can indeed provide a clearer structure for responsibility division, audit tracking, and post-event evidence provision.
The key here is not "whether you used blockchain," but rather: who is your client, what is your charging method, and have you marketed anything with investment expectations to the non-specific public. As long as the business model involves B2B payments, project-based, or subscription-based fees, this path is relatively clean.
Second, Web3 applications that explicitly remove financialization but retain the "digital asset" shell.
The evolutionary path of NFTs in mainland China has actually provided a clear demonstration. As long as it does not involve secondary market trading, does not emphasize investment returns, does not promise appreciation potential, but instead returns to usage scenarios like "digital content, digital rights, digital credentials," regulation has not outright negated it.
Digital collectibles, brand membership credentials, event passes, digital copyright identifiers, and digital identity badges are essentially "issuing an immutable, verifiable credential on the chain." What such projects really need to do is not "tell a Web3 narrative," but solidly solve problems related to brand operations, user relationships, and content rights confirmation.
Many entrepreneurs get stuck here, often not due to legal issues, but business judgment problems: Does using the chain really make it better than not using it? If the answer is merely "it looks more Web3," then the project likely won't last long.
Third, peripheral Web3 businesses centered around compliance, risk control, and industry services.
As regulation gradually becomes clearer, a large number of "service demands" will反而 (conversely) emerge. Exchanges, project teams, overseas expansion teams, content platforms, and technology companies all need legal, compliance, risk control, audit, data analysis, on-chain monitoring, and anti-money laundering support.
A significant feature of this type of business is: it doesn't stand at the center of the风口 (trend), but it exists long-term and is increasingly essential. For those familiar with the industry and capable of clearly explaining complex logic, this is a typical "slow business."
So everyone should understand why Mankun Law Firm has long深耕 (deeply cultivated) a细分赛道 (niche track) like Web3 and plans to work on it for the next ten or twenty years first.
From legal consultation, compliance structure design, overseas entity setup, to on-chain fund path analysis, risk排查 (screening), and system construction—these tasks are not sexy, but very real.
Fourth, Web3 entrepreneurship premised on "going global," but completing non-core环节 (links/parts) within mainland China.
This path often tests the entrepreneur's structural design ability and sense of legal boundaries the most. Its core logic is not "pretending not to do Web3 domestically," but rather clearly splitting: which环节 (parts) belong to technical and service activities that mainland Chinese law can accommodate, and which环节 (parts) must be completed under overseas compliance frameworks.
From a practical operational perspective, what domestic teams can legally undertake often集中在 (focuses on) R&D, product design, protocol auditing, system operation and maintenance, risk control models, data analysis, compliance research, content support, and other环节 (aspects). These tasks essentially belong to technical services or intellectual services and do not directly involve the issuance, trading, or fund flow of virtual currency itself. As long as they do not directly promote tokens to the non-specific public, do not participate in fundraising, and do not participate in trade matching, this role is relatively legally可控 (controllable).
What really needs to be "moved abroad" are the front-end parts involving financial attributes: token issuance, stablecoin design, on-chain trading, clearing and settlement, user fund custody, profit distribution mechanisms, etc. Once these behaviors occur within mainland China, the risk is almost non-negotiable. But if completed by an overseas entity, with service targets, market promotion, and user acquisition all overseas, and the domestic team only exists as a technical or support party, the overall structure has cases and space in practice.
This type of model often presents itself in reality as a layered structure: overseas is the location of the business entity, compliance entity, and commercial closed loop; the mainland is more like an "engineering department + research institute + back-end support center." It is not sexy and is difficult to包装 (package) into a grand narrative, but it wins in sustainability. This may not be the ideal state of Web3 entrepreneurship, but it is a practical path repeatedly verified under the current legal framework.
Of course, the premise of this path is that entrepreneurs must have a real understanding of "going global" itself, not just停留在 (stay at) registering an overseas company or setting up an overseas website. Where is the market, who are the users, who bears the compliance responsibility, how is the funding closed loop—if these issues are not thought through clearly, no matter how beautifully the structure is拆 (split), it is easy to lose control at the execution level.
Finally, repeatedly advising friends who want to start a business in the Web3 industry: Under the legal context of mainland China, the following matters almost certainly fall into the high-risk or even illegal zone: issuing tokens or变相发行 (issuing tokens in disguised form) in any form; fundraising under the names of "nodes, partners, whitelists"; promising returns or implying回报 (returns); providing virtual currency trading matching, pricing, or promotion for others; conducting promotion with crypto asset investment orientation in WeChat groups, communities, or live streams.
In mainland China, first treat Web3 as a "technology and tool," rather than "finance and assets," and the entrepreneurial path will反而 (conversely) be longer. This is definitely not the most bustling route, but it might be the one least likely to翻车 (overturn/crash).
