Head of Beijing’s financial regulator: “the sale of security tokens is illegal”
Huo Xuewen, head of the Beijing Municipal Finance Bureau, warned the company about the illegal sale of security tokens (STOs).
At a recent fund management forum organized by the bureau on Saturday, Huo said that fundraising activities through the STO are "illegal", at least in Beijing.
"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," he said.
The STO procedure is similar to the initial token offering (ICO), where cryptocurrency tokens are sold by a company to the public to raise funds. However, STO also allows token holders to receive a share of the company's profits based on the underlying asset.
The Chinese authorities are taking measures against the collection of funds through the release of tokens in September 2017, when the People's Bank of China (NBK) banned the ICO and forced the cryptocurrency exchanges to cease operations. Last month, the NBK said it was looking for ways to stop free distributions of cryptocurrencies and tokens (airdrops).
In summer, Pan Gongsheng, vice president of the NBK, said that the central bank intends to fight foreign ICOs, which are attracting local investors. Then he declared that the government would stop working on any financial product that was released "without permission from the controlling authorities," and its participants would be severely punished.
In addition, in summer, the authorities in Beijing and Guangzhou banned the holding of cryptocurrency activities in the region. The ban is aimed at "maintaining the security and stability of the financial system," as the authorities then stated.