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STOs Considered an “Illegal Financial Activity in China” as the Country Doubles-Down on Ban
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The People’s Bank of China has put out a statement on Saturday officially banning security token offerings throughout mainland China. The policy is yet another example of the growing opposition to digital currencies within the Chinese state.
China Central Television has reported that Pan Gongsheng, the deputy governor of the People’s Bank of China, made a public statement in Beijing that STOs are effectively illegal.
“The STO business that has surfaced recently is still essentially an illegal financial activity in China,” he said. “Virtual money has become an accomplice to all kinds of illegal and criminal activities.”
STOs Grouped with ICOs: Both Banned
China began its crackdown on ICOs last year in September when they completely banned the initial coin offering model. Despite reports that this has proven to be ineffective and limited in scope, on the books ICOs remained banned. It seems now that, for the purposes of the Chinese state, there is no real distinction between ICOs and STOs: both are illegal.
In the opinion of regulators like Gongsheng, the ICO and, by association, the STO model are merely vehicles for financial fraud and Ponzi schemes. Gongsheng also made it clear that if the country had not decided to ban ICOs wholesale last year, the entire financial system would have suffered tremendously.
The news comes after Chinese financial official Huo Xuewen recently declared STOs illegal. This new policy outlined by the People’s Bank of China seems to be a more official announcement than the one made last week. Earlier this month as well, the head of Beijing’s Municipal Bureau of Finance made a similar statement, telling a wealth management forum that STOs were illegal. The news as been a long-time coming, but now we have official word from the Chinese state.
Will China eventually have a registration process for STOs? Do you see this ban as being permanent? Let us know in the comments below.
Image courtesy of AP Images.
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Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
