Author: Zhang Chengjun, Senior Lawyer at Shanghai Mankun Law Firm

It has been increasingly difficult for domestic Web3 startups in China since 2018. Many Web3 entrepreneurs have started to "go global," and some even say that 2018 was the first year for Chinese Web3 entrepreneurs to go global. Due to the clear definition of issuing coins and exchanges as illegal criminal activities in China, the question arises: is going global always reliable?

01 Current Situation of the Web3 Industry in Southeast Asia

Let's first talk about the current situation of several popular destinations for Chinese Web3 entrepreneurs going global.

The first and foremost destination is the countries in Southeast Asia, such as Thailand, Singapore, Vietnam, and others. The global first Web3 music festival opened in Bangkok, Thailand on May 4th to May 5th, 2024. Fansland, along with Fantopia, IME, Neo, Neuroblocks, Hape, BAC Games, LingoAI, NOTHING RESEARCH, Transi, Titan Network, Trip.com, Trekki NFT, OneKey, HPOS10I, IOST, NFTGo, Gonesis, and the NFT special support partner BNB Chain, participated in this carnival. With the opening of the music festival, Chinese Web3 entrepreneurs have a deeper understanding of how appealing the Web3 ecosystem in Southeast Asian countries is.

Apart from the significant Web3 ecosystem, the reasons for choosing to go global also include policies. We have also mentioned why domestic entrepreneurs choose to go global, as China cannot provide corresponding policy support and may even be subject to regulation, or even criminal involvement.

The second reason is geographical location. Being Asian countries, they are close to the motherland, with short travel times and almost no time difference, allowing synchronization with domestic operations.

The third reason is the social environment. Many ethnic Chinese people live in Southeast Asian countries, and their attitudes towards Chinese people are friendly. Dietary habits and other aspects can be quickly adapted to.

The fourth point is market factors. Going global requires consideration of the landing of products in overseas markets. Southeast Asia has a large population, lower income compared to China and other developed countries, which is more conducive to the initial growth and development of projects. Additionally, the penetration of mobile devices and the internet in Southeast Asian countries is relatively high, the population is relatively young, and they can accept and learn about Web3 more quickly.

There are many other reasons for choosing Southeast Asia to go global, such as the current Web3 capital situation in Southeast Asian countries. We have already mentioned too many advantages. It is precisely because of these advantages that more and more Chinese Web3 entrepreneurs are attracted to go global in Southeast Asia.

However, the purpose of this article is to make it clear to you that things do not only have a bright side, but also a dark side. Therefore, the following content is the main body.

02 Can Doing Web3 Projects in Southeast Asia Escape Legal Supervision in China?

Unfortunately, the answer is no. This is because our country's jurisdiction over illegal activities adopts the principle of territorial jurisdiction. Article 7, Paragraph 1 of the Criminal Law of the People's Republic of China stipulates: "If a citizen of the People's Republic of China commits a crime outside the territory of the People's Republic of China as prescribed by this Law, this Law shall apply. However, if the maximum penalty prescribed by this Law is three years of fixed-term imprisonment or less, the offender may not be prosecuted." According to the above provisions, Chinese citizens who commit crimes outside the territory of China, regardless of whether the local law considers it a crime, regardless of the severity of the crime, and regardless of the interests infringed by the crime, are generally subject to the Criminal Law of China. It is only according to the provisions of the Criminal Law of China that if the statutory maximum penalty for the crime committed by the Chinese citizen is three years of fixed-term imprisonment or less, the prosecution may be waived. The so-called "may not be prosecuted" does not mean absolutely not prosecuted, but reserves the possibility of prosecution. Moreover, Southeast Asian countries were the first to sign extradition agreements with China, such as Thailand, Laos, Cambodia, the Philippines, and Vietnam.

03 What Does "Extradition" Mean, and Under What Circumstances Will Extradition Occur?

Extradition refers to the transfer of a person accused of a crime or already sentenced by another country within its own territory to the requesting country for trial or punishment. The extradition system is an important system for international judicial assistance and a crucial guarantee for countries to effectively exercise jurisdiction and punish crimes. Based on the "principle of nationality jurisdiction" or "territorial principle" in international law (i.e., a country has the right to exercise jurisdiction over all its nationals, regardless of whether they reside domestically or abroad). This means that if the criminal is a citizen of the country, the country can exercise jurisdiction. In other words, although physically going global, due to nationality, once a situation arises where the person is accused of a crime in China, the Chinese public security organs, in accordance with the relevant provisions of the Extradition Law of the People's Republic of China, can request extradition from foreign countries through the Ministry of Foreign Affairs. Currently, China has used extradition treaties on a large scale for the extradition of suspects of telecommunications fraud in Vietnam.

04 Apart from the Issues of Web3 Projects Themselves, There May Also Be the Possibility of Committing "Illegal Border Crossing" Offenses

When the project party goes global, they often bring the entire technical team and even family members from China. In handling visa issues, in order to expedite and facilitate the process, they often use tourist visas. According to the "Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Obstructing Border Control" Article 6, any of the following circumstances shall be deemed as "illegal border crossing" as stipulated in the third section of the sixth chapter of the Criminal Law:

(1) Entering or exiting the country (border) without entry and exit documents or evading border inspections;

(2) Using forged, altered, or invalid entry and exit documents to enter or exit the country (border);

(3) Using another person's entry and exit documents to enter or exit the country (border);

(4) Using entry and exit documents obtained by means of false reasons for entry and exit, concealing true identity, or using another person's identity documents;

(5) Illegally entering or exiting the country (border) by other means.

It seems that Southeast Asian countries are a utopia for Web3, but due to China's supervision of Web3 entrepreneurship and the reasons of the projects themselves, these global projects violate China's regulatory requirements. Coupled with the "principle of nationality" and the fact that most Southeast Asian countries have extradition agreements, going global in Southeast Asia is not as ideal as it seems. It also cannot escape the supervision and criminal legal risks in China. Therefore, whether going global in Southeast Asia is reliable or not needs to be seriously questioned.

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