Huo Xuewen, Beijing’s Municipal Bureau of Finance chief advices the projects considering a security token offering to raise fund, that security token offering (STO) fundraising is currently illegal in the country.
Xuewen commented this over the replacement of ICOs with the new concept of STOs, at a wealth management forum on Saturday. He said (according to a rough translation):
“I will make a risk warning to those who are…in Beijing and want to issue STO. Don’t do it in Beijing.”
STOs enables the investors to purchase a share in the profits gained from the tokenized assets, whereas ICOs tokens represent “utility tokens.” With security token offerings, international investors could entail a combination of liquidity provided by the ICO method along with the regulatory compliance of more traditional investment vehicles. However, it seems that for now, Beijing disses STOs, similar to ICOs.
In September 2017 the People’s Bank of China outright banned ICOs, shutting down many cryptocurrency exchanges in the process. Last month PBoC announced that there will be a crackdown on crypto airdrops as well (free cryptocurrency token giveaways). Earlier this year, Pan Gongsheng, PBoC vice president said that the bank also intended to take down ICOs based abroad that continued to solicit Chinese investment:
“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.”