Bounty hunters in the crypto circle, how to ensure legal compliance for Web3 task bounty platforms?

Written by: MankiwBlockchainlegal service

On July 30, the long-awaited Layer3 was launched on Bitget exchangeThe Launchpool ofStaking MiningPool and transaction mining activities, as of August 7, its nativeToken The L3 pledge volume exceeded 100 million.

* Image source: Layer3 official Twitter

With the strong rise of platforms such as Galxe (formerly known as Project Galaxy), Rabbithole, and Layer3, Web3 task bounty platforms areBlockchainThe ecosystem has shown great potential. However, the rapid development of this emerging industry has also triggered deep thinking about the compliance issues of the platform. In this article, Lawyer Mankiw will talk about what legal matters need to be paid attention to in the Web3 task bounty platform.

Basic introduction to the task platform

As a new digital marketing tool in the Web3 field, the Task Bounty Platform not only provides comprehensive task marketing and user engagement solutions for project owners, but also provides a space for end users to participate and earn incentives. Since 2020, the Web3 Task Bounty Platform has experienced rapid innovation and expansion of application scenarios in just four years. Its development process can be divided into three stages:

Initial transformation stage

Web2 social media marketing service provider Gleam.io took the lead in providing services to the Web3 industry, promoting the birth of the Web3 task bounty platform. At this stage, the task platform is mainly committed to expanding the influence of the project party on social media through tasks and attracting user attention.cryptocurrencyandBlockchaintechnology.

* Image source: Gleam.io official website

Exploration and maturity stages

With the rapid development of DeFi and NFT, many Web3 platforms focusing on task marketing, such as Galxe, Rabbithole, and Layer3, have emerged and quickly become the mainstream of the industry. While integrating emerging technologies, these platforms have begun to support cross-chain technology, focusing on improving user experience and enhancing platform liquidity.

Diversification transformation and innovation stage

The task platform is no longer limited to social media promotion, but has expanded to a wider range of application scenarios such as task management of public chains and data networks. It has gradually evolved from a simple marketing tool to a complex ecosystem, dedicated to promoting user participation andCommunityConstruction.

Through these three stages of development, the Web3 Task Bounty Platform has continuously optimized its services to adapt to changing market demands and technological advances, demonstrating its important role and potential in the Web3 ecosystem.

The multi-dimensional value and services of the task bounty platform

As an "intermediary track" that serves both project parties and users, the task platform connects with project parties to attract user traffic with virtual asset incentive mechanisms. It attracts users to participate in various projects, receive points, NFTs, and token rewards by following project party social accounts, answering questions, and performing on-chain operations and other airdrop tasks.

From the user sideXiaobai NavigationIn other words, the task platform can enable Web3 novices to continue learning through intuitive user guidance, educational resource sharing, and task practice.BlockchainWhile learning the technology and Web3 concepts, users can quickly master the on-chain operations, obtain airdrop rewards, and increase their activity. In addition, users can also accumulate on-chain and off-chain activity proofs through the records of task completion, efficiently accumulate personal reputation across platforms, and build and enhance their on-chain image.

In addition, Web3 task bounty platforms usually communicate and cooperate with multiple project parties to provide user traffic for them, which has also become one of the effective channels for project parties to consider in marketing and publicity:

First, precision marketing and user acquisition.By using on-chain and off-chain data analysis, we can screen out real and active target users for the project party, and help the project party attract new users through task release and rewards, so as to increase the project's popularity and user base, and avoid invalid users andWitchattack.

Second, multi-dimensional marketing data analysis.Provide detailed data dashboards and analysis tools to enable project parties to monitor activity results in real time (including but not limited to key indicators such as user conversion rate, activity level and task completion rate) and dynamically adjust marketing strategies.

Third, technical support and customized services.The task platform provides technical support to the project party (including but not limited to smartcontractdeployment, API integration, data interface, KYC verification, etc.), and provide customized services based on the specific needs of the project party.

Fourth, joint marketing activities.The task platform allows project parties toCommunityCooperation, launching cross-project joint marketing activities, strengthening brand promotion, sharing resources and user base, and achieving mutual benefit. Layer3 has cooperated with multiple DeFi projects (such as SushiSwap and Aave) to promote through joint marketing activities. Users can obtain rewards from Layer3 by completing tasks of DeFi projects, and can also obtain rewards from DeFi projects.TokenOr NFT rewards.

The development and transformation of task bounty platforms

As the industry matures and develops, task platforms have also begun to seek diverse application scenarios, exploring multiple tracks such as public chains, data networks, tokens, Discord, and trying to maximize the monetization of accumulated user and project resources.

As a leader in Web3 task bounty platforms, Galxe has a significant first-mover advantage in exploring the road to transformation. Not only has it issued its own native tokens GAL and G (the former will be replaced by the latter), but it has also officially launched the Gravity public chain in June this year, and plans to fully launch the mainnet in the second quarter of 2025 to further promote and strengthen cross-chain collaboration with major blockchains such as Ethereum, Binance Smart Chain, and Polygon. In addition, Galxe is also actively exploring the data network and Discord track, committed to building a decentralized identity authentication system (Decentralized Identity), actively maintaining the Discord community, and through a multi-channel collaborative development strategy, strives to achieve full blossoming in various fields, bringing users a richer and more diverse Web3 experience.

* Image source: Galxe official website

Since 2023, Soquest has been working hard to accelerate its transformation from a task platform to a data network, launching a series of new features and services around data sharing, privacy protection, and data monetization. In this track, Soquest gives users full control over their personal data, allowing users to earn revenue by sharing data with various applications and services while protecting their privacy.

Key points of legal compliance of task platforms

From the above introduction, we can see that in today's digital age, Web3 task bounty platform, as an emerging interactive mode, provides a new channel for effective communication and interaction for global users and project parties. However, the global nature of the platform also brings a series of complex legal compliance challenges:

Legal supervision

Different countries and regions have different regulatory attitudes towards Web3 startups. As a result, when project owners build a global Web3 task bounty platform and attract project owners and users from all over the world, cross-jurisdictional legal policy supervision, legal application and jurisdiction become one of the complex challenges that task platforms need to face in their development. For example, China's prohibition on issuing coins restricts the issuance of native tokens of domestic task platforms.

What also requires extra attention is that some countries (such as the United States, Singapore, etc.) will classify virtual currencies as securities, which means that the distribution of token rewards by the task platform must also comply with the provisions of the securities law. Securities registration or exempted business measures must be carried out before distribution, otherwise it may face legal proceedings and fines.

In addition, due to the anonymity of tokens and other blockchain assets, task platforms may become a path for money laundering and other illegal activities. In order to prevent this risk, platforms should implement strict or loose KYC procedures in accordance with the regulatory requirements of different countries to authenticate customers. However, it should be noted that this is in conflict with the decentralization and anonymity advocated by Web3, and platforms should find a balance between compliance and user privacy.

Data Compliance

The diverse application scenarios of the task platform have undoubtedly brought huge development potential to the industry, but also put forward higher requirements for compliance. In the context of data network transformation, data compliance should become one of the core focuses of the development of the task platform.

In terms of data collection and sharing, platforms usually need to collect users’walletAddress, transaction history and other on-chain and off-chain data in order to provide user information to the project party, track task completion and issue rewards. However, mainstream countries usually have clear legal provisions on the platform's prompt and explanation obligations and user authorization (such as the EU's General Data Protection Regulation), and pay special attention to the collection and analysis of off-chain data. Taking Galxe as an example, although it mainly relies on on-chain data, once additional user information is involved (such as off-chain emails or social media accounts), Galxe should ensure that the collection and use of this data complies with relevant data protection regulations.

In addition, the sensitivity of cross-border data transfer cannot be ignored. Taking China as an example, according to the DataSafetyArticle 2, paragraph 2 of the Law clearly stipulates: "Carrying out data processing activities outside the territory of the People's Republic of China that damages the national security of the People's Republic of ChinaSafety"If the data processing is infringed upon by the law, the public interest or the legitimate rights and interests of citizens or organizations, legal liability shall be pursued in accordance with the law." This applies not only to data processors outside the country, but also to data processors within the country whose data processing activities are outside the country. Therefore, when conducting cross-border data transmission, task platforms must strictly abide by laws and regulations to avoid potential legal risks.

Criminal risks

In the operation of the Web3 task bounty platform, if the project party defrauds users' funds through false airdrop projects and implements RugPull behavior, it is usually suspected of fraud and constitutes a criminal offense. If the task platform provides certain technical support in this process, there may be certain criminal risks. The current criminal regulations related to virtual currencies in various countries vary greatly. Depending on the location of the project party and the victim, the task platform may face different risks. For example, if the project party or the victim is in China, and the task platform clearly knows that the project party has committed fraud, has a clear understanding of the nature of its behavior and the harmful consequences, and still provides assistance and large-scale participation, it may be determined that it and the project party jointly constitute a crime of fraud; if the task platform does not fulfill the legal review obligations of the project party and the airdrop tasks it publishes, and knows that the project party uses the task platform to commit crimes, it may be determined to provide technical support for it and be suspected of aiding and abetting risks.

Therefore, the platform should establish a strict review and monitoring mechanism, strengthen due diligence obligations in the process of project promotion and user management, and actively prevent and respond to potential fraud to reduce criminal risks.

Attorney Mankiw's Summary

As the forefront of blockchain technology innovation, the Web3 Task Bounty Platform has built a new interactive bridge for global users and project parties, but it also faces a series of legal and compliance challenges. Based on the analysis of this article, Attorney Mankiw makes the following suggestions for reference:

• Understand and comply with the laws of multiple countries.Ensure that the platform's global operations comply with the laws and regulations of various countries, especially securities regulations and data protection regulations, to maintain the legitimacy of its global operations.

• KYC and AML measures.Implement strict customer identity verification and anti-money laundering measures, balancing user privacy and compliance needs.

• Data protection.Comply with the data protection standards of various countries to ensure theSafetyand legal use to build user trust.

• Cross-border data compliance.Follow the DataSafetyThe Data Protection Law and other regulations ensure the legality and security of cross-border data transmission.

Risk management and due diligence: Establish a project review mechanism to prevent fraud and illegal activities and reduce criminal risks.

Faced with the challenges of policy supervision, data compliance, and criminal risk prevention and control, the Web3 Task Bounty Platform must find a balance between innovation and compliance. Only in this way can the Web3 Task Bounty Platform maximize the potential of projects, release the value of user resources, and promote the development of the entire blockchain ecosystem to a higher level.

The article comes from the Internet:Bounty hunters in the crypto circle, how to ensure legal compliance for Web3 task bounty platforms?

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