In the issuance and trading of NFT (non-homogeneous tokens), the operating model and legal status of the digital collection trading platform (hereinafter referred to as the "trading platform") are crucial. This article sorts out the operation mode of the digital collection trading platform, and analyzes the possible legal risks in it.
Since 2021, "NFT" (non-fungible tokens) have become popular all over the world. NFT is the abbreviation of "Non-Fungible Token", which means non-replaceable tokens, guaranteed by blockchain technology, generated, unique and indivisible on a specific blockchain network. Unlike traditional securities, NFT is a digital asset that has no value in itself, but its value can be realized through technical means. At present, domestic NFT trading platforms mainly have three operating modes:
1. Trading platform (platform side)
The transaction platform party, that is, the digital collection distribution platform, is legally a network service provider (hereinafter referred to as "network service provider"). At present, most digital collection trading platforms on the market belong to this type. The network platform provided by the network service provider provides a platform for digital collection transactions and participates in NFT transaction activities.
From the perspective of legal attributes, when collecting and using user information for providing services, network service providers shall obtain user consent in accordance with the law or perform other user information protection obligations stipulated by laws and administrative regulations. According to the "Measures for the Administration of Internet Information Services", Internet information service providers shall not engage in the following acts: (1) Unauthorized publishing, copying, dissemination or utilization of information posted by users without the consent of users; (3) Misleading, deceiving, or forcing users to use or close the website; (4) Providing malicious and illegal links, placing advertising promotion links, and pushing commercial advertisements or other information that has nothing to do with business.
2. Operators
The operator refers to the trading platform as the main body of operation, and earns profits by charging users. The specific mode of operation is: (1) provide users with digital collection transaction services and charge transaction fees; (2) provide users with digital collection collection services and charge collection fees; (3) provide users with digital collection use Services, such as gift giving, presentations, etc.
Since operators have dual identities, that is, they are both issuers and transaction subjects of digital collections, so they may face the supervision of regulatory agencies in practice. According to the "Network Security Law of the People's Republic of China", network operators should strengthen the management of information released by their users, and if they find information that is prohibited by laws and administrative regulations from publishing or transmitting, they should immediately stop transmitting the information and take measures such as erasure , to prevent the spread of information, keep relevant records, and report to the relevant authorities. If the network operator fails to provide clues or evidence that the perpetrator is suspected of violating the law or committing a crime, the relevant competent department may impose administrative penalties on the network operator in accordance with Articles 67 and 78 of the Cybersecurity Law of the People's Republic of China.
3. Technical service provider
The technical service provider is responsible for the issuance of NFT digital collections, including the confirmation, certification, storage, transaction and distribution of digital collections. Technical service providers need to obtain relevant qualifications, such as network security level protection certification, value-added telecommunications business operation license, etc. Technology service providers take the digital collection trading platform as part of their business and provide users with corresponding services.
Technical service providers need to obtain the "People's Republic of China Value-Added Telecommunications Business License" before they can provide related services nationwide. In addition, technical service providers need to obtain "Interim Provisions on the Administration of International Networking of Computer Information Networks of the People's Republic of China" (hereinafter referred to as the "Regulations") "Article 4 Telecommunications business operators shall apply for telecommunications services in accordance with the conditions and procedures stipulated by laws and administrative regulations. No business license; no unit or individual shall carry out telecommunications business operations without a telecommunications business license." Only with the relevant qualifications can NFT digital collection trading services be provided nationwide, but only if the digital collection trading platform complies with the "Regulations" conditions specified in.
4. "Platform + operator" model
The "platform + operator" model means that the trading platform is responsible for issuing, and the operator is responsible for operating and providing services to consumers. Under this model, the trading platform is only responsible for the distribution and sales of digital collections, and does not participate in operations and management. Under this model, the trading platform mainly undertakes responsibilities such as technical support and issuance services. In this model, the trading platform has no management authority over the operation of digital collections, cannot control the quantity and quality of digital collections, and cannot determine the price of digital collections.
Under this mode of operation, there is an equal cooperative relationship between the trading platform and the operator. The trading platform does not enjoy any interest when it provides technical support, distribution services and other services for operators; however, when there is a dispute between the trading platform and consumers, the trading platform needs to bear the responsibility. In addition, this model does not conform to the principles of equality, voluntariness, fairness, and good faith of civil subjects in my country's "Civil Code".
5. Compliance risk
Regardless of the mode of operation, if the trading platform engages in securities, futures and other financial businesses without the approval of relevant departments or in a disguised form, it may face the risk of confiscation of illegal income, order to suspend business for rectification, and close the trading platform; If there are flaws, you may face the criminal risk of illegally absorbing public deposits and other crimes.
"The People's Bank of China and other seven departments issued the "Announcement on Preventing the Risks of Token Issuance and Financing", prohibiting various token issuance and financing activities. Strengthen monitoring, analysis, research and judgment on token financing trading platforms and other various token financing activities. Strictly investigate and deal with institutions and illegal financial business activities engaged in illegal financial activities. Any unit or individual that provides token issuance financing or disguised token financing services in my country must immediately stop relevant behaviors and take the initiative to report to the financial management department.”
6. Legal risks
(1) Article 225 of the "Criminal Law of the People's Republic of China" stipulates that anyone who, in violation of state regulations, commits one of the following illegal business operations and disrupts market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also be sentenced to or A single fine of not less than one time but not more than five times the illegal income; if the circumstances are particularly serious, a fine of not less than five years and a fine of not less than one time but not more than five times the illegal income or confiscation of property: (1) Operating laws and administrative regulations without permission (2) buying and selling import and export licenses, certificates of origin for import and export, and other business licenses or approval documents stipulated by laws and administrative regulations; Illegally operating securities, futures, and insurance businesses approved by relevant competent authorities, or illegally engaging in fund payment and settlement businesses; (4) Other illegal business operations that seriously disrupt market order.
7. Conclusion
Although the digital collection trading platform is still in the early stage of development, many companies have launched their own digital collection trading platforms, and most of them are invested and established by listed companies. With the development of technology, more trading platforms may appear in the future, and companies will continue to launch new digital collection trading platforms. However, since there are no laws and regulations to regulate digital collection trading platforms, there is also a certain degree of competition among trading platforms. Therefore, how to carry out business cooperation and legal relationships among digital collection trading platforms also needs to be further clarified.
Of course, regardless of the operating model, legal risks always exist. If domestic NFT trading platforms want to develop healthily, they must be compliant and legal. From the perspective of business model, the digital collection trading platform should adhere to the principle of "decentralization" and should not engage in or assist in any illegal financial activities; from the perspective of business scope, the digital collection trading platform must have a clear business scope, strict Business review mechanism and anti-money laundering, anti-terrorist financing and other obligations; From the perspective of legal relationship, digital collection trading platforms should improve their legal relationship in accordance with relevant laws and regulations. Only in this way can we avoid facing administrative penalties, civil disputes and criminal risks due to improper management.