Southeast Asia: An Emerging Paradise for Web3 Projects Going Global? Extradition Agreements Reveal the Truth
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Southeast Asia: An Emerging Paradise for Web3 Projects Going Global? Extradition Agreements Reveal the Truth
Is going global necessarily reliable?
Navigating Web3 tides with focused insightsAuthor: Zhang Chengjun, Senior Lawyer at Shanghai Manqin Law Firm
Starting Web3 ventures domestically in China is difficult. Since 2018, an increasing number of Web3 entrepreneurs have begun going overseas—some even refer to 2018 as the inaugural year for Chinese Web3 entrepreneurs expanding abroad. Given that token issuance and cryptocurrency exchanges are explicitly classified as criminal activities within China, a natural question arises: Is going overseas truly a reliable solution?
01 Current State of the Web3 Industry in Southeast Asia
Let’s first examine the current state of the Web3 industry in several popular overseas destinations favored by Chinese Web3 entrepreneurs.
The primary destinations are Southeast Asian countries such as Thailand, Singapore, and Vietnam. The world’s first Web3 music festival was held in Bangkok, Thailand, from May 4 to May 5, 2024. Fansland participated in this event alongside Fantopia, IME, Neo, Neuroblocks, Hape, BAC Games, LingoAI, NOTHING RESEARCH, Transi, Titan Network, Trip.com, Trekki NFT, OneKey, HPOS10I, IOST, NFTGo, Gonesis, and NFT supporting partner BNB Chain. The festival further deepened Chinese Web3 entrepreneurs’ impression of the vibrant and attractive Web3 ecosystem flourishing in Southeast Asia.
Of course, the most significant factor behind this appeal is policy. As previously mentioned, domestic entrepreneurs choose to go overseas precisely because China does not offer supportive policies for Web3 projects—in fact, such activities face strict regulation and may even lead to criminal liability.
Secondly, geography plays a role. Being fellow Asian nations, these countries are geographically close to China, with short travel times and almost no time difference, enabling seamless coordination with teams back home.
Thirdly, social environment matters. There is a large ethnic Chinese population in Southeast Asia, and local communities generally hold favorable attitudes toward Chinese nationals, making cultural adaptation—including dietary habits—relatively easy.
Fourth is market potential. When launching overseas, product-market fit becomes crucial. Southeast Asia has a large population with relatively low income levels compared to China and other developed economies, which makes it ideal for early-stage project growth and development. Additionally, mobile device penetration and internet access rates are high, and the population is young, allowing faster adoption and learning of Web3 technologies.
There are many other reasons why Southeast Asia is appealing—such as the current state of Web3 capital flows in these countries. We’ve already discussed numerous advantages, and it's exactly these benefits that continue to attract more and more Chinese Web3 entrepreneurs to expand into Southeast Asia.
However, the purpose of this article is to make one thing clear: no situation is entirely positive; every opportunity carries its risks. Therefore, what follows is the core message.
02 Does Operating a Web3 Project in Southeast Asia Allow You to Evade Domestic Legal Oversight?
Unfortunately, the answer is no. This is because China exercises jurisdiction over crimes based on both territoriality and nationality principles. Article 7, Paragraph 1 of the People's Republic of China Criminal Law states: "When a citizen of the People's Republic of China commits a crime stipulated in this Law outside the territory of the People's Republic of China, this Law shall apply; however, if the maximum punishment prescribed by this Law is fixed-term imprisonment of no more than three years, prosecution may be waived." According to this provision, Chinese citizens who commit crimes abroad are subject to Chinese criminal law regardless of whether their actions are considered illegal under local laws, the severity of the offense, or whose interests were harmed. Only when the statutory maximum penalty under Chinese law is less than three years' imprisonment can prosecution possibly be avoided—and even then, “may be waived” does not mean immunity, but rather leaves room for potential prosecution. Moreover, several Southeast Asian countries—including Thailand, Laos, Cambodia, the Philippines, and Vietnam—are among the earliest nations to establish extradition treaties with China.
03 What Does “Extradition” Mean, and Under What Circumstances Can It Happen?
Extradition refers to the transfer of an individual located in one country to another country that accuses them of a crime or has sentenced them for one. It is a key mechanism in international judicial cooperation and serves as a critical tool for enforcing legal jurisdiction and punishing criminal acts. Jurisdiction based on the principle of nationality (also known as personal jurisdiction) allows a country to exercise authority over its own nationals regardless of where they are located. In other words, if a person holds Chinese citizenship, China retains jurisdiction over them even if they are abroad. Thus, even though someone may physically move overseas, their nationality still binds them legally to China. If accused of a crime in China, public security authorities may initiate an extradition request through the Ministry of Foreign Affairs under the PRC Extradition Law. For instance, China has already widely used extradition agreements to repatriate suspects involved in telecom fraud operating within Vietnam.
04 Beyond Web3 Project Risks: Potential Liability for “Illegally Crossing National (Border) Boundaries”
When Web3 project teams relocate overseas, they often bring entire technical teams—and sometimes even family members—from China. Regarding visas, many opt for tourist visas due to their convenience and speed. However, 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 That Obstruct Border Management:
Article 6: Any of the following circumstances shall be recognized as acts of "illegally crossing national (border) boundaries" as specified in Section 3, Chapter VI of the Criminal Law:
(1) Entering or leaving the country without valid entry-exit documents or evading border inspections;
(2) Using forged, altered, or invalid entry-exit documents to cross borders;
(3) Using another person’s entry-exit documents to cross borders;
(4) Using entry-exit documents obtained through false pretenses, concealing one’s true identity, or misusing someone else’s identification;
(5) Other methods of illegally entering or exiting the country.
While Southeast Asia may appear to be a Web3 utopia, constraints imposed by China’s regulatory stance toward Web3 entrepreneurship—combined with the inherent risks of such projects, the application of personal jurisdiction, and the existence of extradition agreements between China and most Southeast Asian nations—mean that relocating operations to Southeast Asia is far less advantageous than it might seem. It does not guarantee freedom from domestic oversight or eliminate exposure to criminal liability. Therefore, whether expanding into Southeast Asia is truly reliable remains a major question mark.
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