Chinese Financial Watchdog Declares STOs Illegal

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Chinese Financial Watchdog Declares STOs Illegal

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Security Token Offerings (STOs) have been declared illegal by the chief of Beijing Municipal Bureau of Finance, Huo Xuewen. He stated this at a wealth management forum sponsored by the bureau.

I will issue a risk warning to those who promote and issue STO tokens in Beijing. My advice is to only engage in such offerings when the government has legalized them,” Huo said.

ICOs have been declared by the Chinese government but until now, it has been silent on STOs. With this statement, even these are illegal – at least within the jurisdiction of the Chinese capital.

STOs are very much like ICOs, but with a small difference. Unlike ICOs, tokens issued through STOs offer investors a stake in the profits of the platform, much like traditional financial securities do.

Crypto token issuers have been trying to circumnavigate the blocks that the Chinese government is placing. When ICOs were banned, platforms and issuers simply moved their operations overseas but continued to sell their tokens in the Chinese market. To this, vice president of People’s Bank of China, Pan Gonsheng, had issued a statement: “Any new financial product or phenomenon that is not authorized under the existing legal framework, we will crush them as soon as they dare to surface.”

Crypto issuers have also been using tactics such as airdrops and convincing local investors to fund platforms outside of the mainland. These have also been declared illegal by Chinese authorities.

Even the remote connection with token offerings are swiftly and strictly struck down. In August, Guangzhou Development District even sent a notice to a local business that intended to host a cryptocurrency event, telling them to stop all events and promotions.


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