Beijing Municipal Bureau of Finance director Xuewen Huo warns that security token offerings (STOs) are illegal in the region.
During his speech at the 2019 Global Wealth Management Forum held on December 1, Huo has stated:
“I will make a risk warning to those who are propagating in Beijing and want to issue [security token offerings]. Don’t do it in Beijing.”
Huo underscores that STOs have yet to be granted “authority.”
The finance director, in his speech, also talks about the necessity for diversification and quality in wealth administration, as well as the need to handle the wealth of both the uber-rich and “ordinary people.” He also issues a warning against companies planning to make a profit in Beijing without securing the necessary licenses. Huo also stresses the value of “investor education.”
Beijing, China’s capital and financial hub, is home to the country’s numerous regulators and financial institutions. It also holds over $20 trillion dollars in assets under management. Beijing’s imminence to a majority of the country’s professional investors goes to show that its position precedes that of China.
In September last year, China imposed a ban on ICOs. Then in August of this year, the government intensified its crackdown against other crypto-related operations, prohibiting 124 foreign crypto exchanges from operating in the region. Messaging platforms like WeChat had also barred crypto news outlets while business establishments were also prohibited from promoting digital currencies in Beijing.
At present, STOs are slowly starting to take the place of ICOs as primary source funds and capital investments. Many companies have used STOs to circumvent the regulatory obstacles imposed by many countries. While tokens are instantly categorized as securities and are actually designed and regulated as such, it eliminates any doubt as to what regulations are applicable. Since they are both proactive and compliant at the same time, STO-based companies may evade abrupt regulatory action while acting more credible.
It appears though that China sees STOs in the same light as ICOs. Because of this, the Chinese government and central bank may possibly implement a more comprehensive ban on this new form of fundraising.