STO Is Illegal Financial Activity Says Beijing Financial Supervision Administration

The cryptocurrency and initial coin offering (ICO) market continue to slump. Industry players eager to be more compliant with security token offering (STO). However, Huo Xuewen, director of the Beijing Municipal Bureau of Local Financial Supervision, last Saturday (1 Day), when attending a forum, said that Beijing will regard STO as an illegal financial activity.

Huo Xuewen said that the STO concept has recently been widely publicized, warning people who promote and issue STOs in Beijing. The agency will regard it as illegal financial activity and drive them away. “When the relevant departments approve STO, you can do it again.” He pointed out that many institutions believe that wealth management is the future growth point, but if anyone wants to evade supervision and sell wealth management products without a license, “Don’t do it in Beijing – it is illegal. You can only engage in such activities with the approval from the government.”

China began to ban ICO in September 2017. The relevant authorities believe that ICO is essentially an unauthorized illegal public financing involving the illegal sale of tokens, illegal issuance of securities, illegal fund-raising, financial fraud, and pyramid schemes. In addition, the Beijing Municipal Bureau of Local Financial Supervision was established on November 8, 2018, which will strengthen local financial supervision duties, prevent financial risks, and perform financial service development functions.