Security Token Offerings (STOs) may be booming anywhere else in the world right now, but not in Beijing where the chief Municipal Bureau of Finance, Huo Xuewen has issued a warning against the fundraising model.
While speaking to an audience at a wealth management congress at the weekend, Xuewen explained that it was “illegal” to conduct an STO 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,” Xuewen said as he rounded up his speech.
The audience may find it ironic to note that the official at the onset of his delivery said that Beijing has some of the best ‘financial talents’, only to warn these promising talents to stay away from an activity that will help them realize their potential.
Indeed, that has been the story with China since they began a campaign against cryptocurrencies late last year. Many blockchain talents have moved abroad to find a more regulated environment to pitch their products.
Efforts To Suppress Crypto Industry Growth In China
The fact that the Chinese government has always shown a negative stance toward cryptocurrencies make the declaration by the top finance official just another move to suppress the growth of the industry.
Some world jurisdictions such as Dubai and Belarus have found the concept of STOs favorable than ICOs because they can easily be regulated under existing securities law. But it seems Beijing, and maybe the most of China doesn’t want to let the crypto or any fund-raising model associated with it to thrive.
In September 2017, the Chinese government placed an outright ban on ICOs and subsequently issued an order to local banks to stop them from doing business with crypto exchanges. Just last month there was also notice from the People’s Bank of China (PBoC) that they would be clamping down on projects which are giving free tokens to investors.
There have also been more subtle efforts such as a statement by PBoC vice chairman Pan Gongsheng that they will stop Chinese projects that have moved abroad from targeting Chinese residents.
To some extent, the efforts to suppress the crypto industry in China has been successful but only time will tell whether the government has made the right choice.
They have already missed out on revenue that would have been generated from projects that are now based abroad and could wake up late to the reality that they blew away the chance to play a significant part in the development of a new global financial system.