Virtual asset recommendations, walking a tightrope between "crime" and "business"

At the beginning of 2026, financial regulators’ focus turned to opinion leaders in the virtual asset sector. These so-called “recommendation business practitioners” are identified as unregistered virtual asset service providers. The market immediately fell into a freeze. Because offering links to overseas exchanges and collecting commissions on YouTube and blogs overnight face the risk of severe criminal penalties of up to five years imprisonment.

The issue lies in the unclear legal basis for this punishment. Financial authorities interpret recommendation activities as “intermediation or brokerage of virtual asset trading” under the “Special Financial Information Law” (SpecFin Law). The logic is that the structure of inducing users to register on exchanges and earning profits based on user trading volume essentially constitutes an intermediary business. Considering that the SpecFin Law aims to prevent money laundering, and its intent to block fund flows to unregistered overseas exchanges in regulatory blind spots, this can be understood.

However, from the perspective of the fundamental principle of criminal law—legality of crimes and punishments—this approach is confusing. The virtual asset business operators envisioned by the SpecFin Law are entities that operate quote windows and match buy and sell orders, essentially fulfilling the role of “exchanges.” In contrast, recommendation practitioners are merely “gatekeepers” or “amplifiers” guiding users into the “venue” of the exchange. They do not custody user assets nor directly handle buy and sell orders.

Using a real estate market analogy, recommendation practitioners are closer to “building sales agents” or part-time flyers rather than licensed real estate brokers. Can we punish part-time workers who bring in a large number of clients with the charge of “unlicensed real estate broker”? Inviting registrations (marketing) and facilitating transactions (brokerage) are fundamentally different fields. Even if administrative regulation is necessary, forcibly expanding the interpretation of vague legal provisions to broaden criminal enforcement could greatly undermine the predictability of the rule of law. Therefore, before establishing a clear licensing system, recommendation activities might be considered “non-criminal” business activities lacking a basis for punishment.

Of course, this does not mean turning a blind eye to the drawbacks of the recommendation market. Some opinion leaders use false information such as “capital preservation” and “only rising, not falling” to lure investors into high-risk overseas derivative exchanges, causing huge losses—an act of “predatory marketing” that must be eradicated. If unregistered overseas exchanges operating in violation of domestic laws are assisted and punished as principal offenders, it would be difficult to exempt accessory liability.

The key issue is that attempting to fill the “regulatory gap” through “interpretation” leads to strained and far-fetched results. Currently, China’s legal system does not have a licensing category that permits legitimate virtual asset marketing or investment recommendations. The “Capital Market Law” has a system of “investment recommendation agents” that allows non-securities firms to recommend funds or insurance products; countries like Germany also regulate pure introducers of financial products separately from intermediaries. In contrast, we only wave a binary standard of “non-exchange equals illegal.”

Labeling all recommendation practitioners as criminals is not a wise approach. Underground marketing activities will become even more covert and dangerous through channels like Telegram secret chat rooms. It would be better to bring them into a regulated framework. Drawing on the “Capital Market Law,” establishing a new licensing system for “virtual asset investment recommendation agents” or “intermediary businesses” could be a viable solution.

The virtual asset market is an irreversible trend. Instead of using outdated legal standards to cut through new phenomena and create criminals, what is needed now is nuanced legislation that aligns with reality to enhance market transparency. Recommendation activities are not inherently “evil,” but rather “business activities” that require proper regulation.