Web3 Legal Popularization丨Can GameFi Go Online Without a Game License and Constitute Illegal Operations?

Web3 Legal Popularization Can GameFi Operate Without a Game License?

Author: Shao Shiwei

Currently, the metaverse market is in a period of rapid development. Chain games (GameFi), as a combination of games and decentralized finance (DeFi), have high market potential, with blockchain as the underlying technology. Domestic chain game projects such as Dragon Island and Seaborne have also attracted a lot of attention from players.

NFTs give value attributes to chain games, and many domestic digital collectible platforms (such as HOTDOG, Eighteen Shu Cang, etc.) have also started to lay out the chain game track.

However, in China, the launch of an online game requires approval from the National Press and Publication Administration and obtaining a publication number (license). Due to policy reasons, game licenses are strictly controlled. In 2018, the regulatory authorities even suspended the issuance of game licenses [1]. After the resumption of approval 9 months later, the number of game licenses approved began to plummet.

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Currently, there are no chain game platforms in China that have obtained a game license.

Against this backdrop, some digital collectible project teams are hoping to transition to chain games, but are concerned about the legal risks of not being able to obtain a game license.

Let’s take a look at a piece of news:

It can be seen that launching a game without a license or using a fake license may constitute the crime of illegal operation.

However, the author believes that the application of the crime of “illegal operation” itself is highly controversial in China. For chain game platforms that go online and operate without obtaining a game license, they should not be charged with this crime.

The following points are explained:

According to the definition of the crime of illegal operation in the Criminal Law, there are two basic conditions for constituting this crime: 1. Violating national regulations, and 2. Disturbing market order.

Article 225 of the Criminal Law of the People’s Republic of China, which stipulates the crime of illegal operation: Violating national regulations, engaging in one of the following illegal business activities, and seriously disrupting market order…

Reason 1: Launching a chain game without a license does not constitute a violation of national regulations

According to the Criminal Law of China, “national regulations” refers to laws and decisions designated by the National People’s Congress and its Standing Committee, administrative regulations formulated by the State Council, administrative measures issued, and decisions and orders issued.

The basis for considering launching a chain game without a license to be a criminal offense is the “Regulations on the Administration of Online Publishing Services,” but the effectiveness level of this regulation is a departmental regulation. Although the effectiveness level of the “Regulations on the Administration of Publishing” on which this regulation is based belongs to administrative regulations, the application of the “Regulations on the Administration of Publishing” is limited to “electronic publications,” etc. However, there is no explicit provision on whether online games belong to the category of “electronic publications.” According to the “Regulations on the Administration of Electronic Publications,” electronic publications are generally tangible carriers [2].

Therefore, the launch and operation of blockchain games without an approval number does not violate national regulations.

Article 51 of the “Regulations on the Administration of Internet Publishing Services” states that engaging in internet publishing services or publishing online games without approval (including online games authorized by overseas copyright holders) without authorization is a violation of the Criminal Law. If it constitutes a violation of the Criminal Law, the criminal responsibility shall be pursued in accordance with the provisions of Article 61 of the “Regulations on Publishing Administration” and Article 19 of the “Administrative Measures for Internet Information Services”. The second article of the “Regulations on Publishing Administration (2020 Revision)” states that the term “publication” refers to newspapers, periodicals, books, audio and video products, electronic publications, etc.

Reason 2: Launching blockchain games without an approval number does not constitute “disrupting market order”

According to the Criminal Law, the crime of illegal business operations requires a serious disruption of market order, including operating state monopolies, restricting the sale of goods, or buying and selling import and export permits and other approval documents, engaging in illegal fund payment settlement business, and other behaviors.

One of the characteristics of the Criminal Law is “subject to criminal punishment.” According to the “Regulations on the Administration of Internet Publishing Services,” operators can be punished with a fine of up to 10 times the amount of illegal business operations, website closure, confiscation of illegal gains, and a series of punitive measures.

In the absence of clear provisions in the Criminal Law that blockchain games without qualifications and licenses constitute “serious disruption of market order,” and in the presence of corresponding administrative penalties, according to the modest nature of the Criminal Law, criminal means should not be used for punishment.

Risk Warning

For blockchain games launched without an approval number, even if they do not constitute the crime of illegal business operations, compliance with other aspects still needs to be taken into consideration during operation. For example, whether there is suspected infringement of others’ copyrights, involvement in pornography, violence, or violation of the socialist core values. If the circumstances are serious enough to meet the criteria for filing other criminal charges, there is still a certain degree of risk.

[1] On March 29, 2018, the former National Press and Publication Administration issued the “Notice on Important Matters of Game Declaration and Approval,” stating that due to institutional reforms, the issuance of all game approval numbers has been completely suspended.

[2] Article 2 of the “Regulations on the Administration of Electronic Publications” states that… The term “electronic publications” referred to in these regulations refers to mass media that stores information with informative and ideological content in a fixed physical form such as magnetic, optical, and electronic media through digital code. It includes read-only optical discs (CD-ROM, DVD-ROM, etc.), write-once optical discs (CD-R, DVD-R, etc.), rewritable optical discs (CD-RW, DVD-RW, etc.), floppy disks, hard disks, integrated circuit cards, and other media forms recognized by the General Administration of Press and Publication, as well as other media forms.

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