The head of Beijing’s Municipal Bureau of Finance recently warned that security token offerings (STOs) fund-raising activities are illegal in the City.
On Saturday, Huo Xuewen at a wealth management forum hosted by the bureau said that security token offerings are illegal at least in the Beijing.
At the forum, he also said that he will issue a threat warning to the firm’s who issue and promote the STO tokens in the city. And added that his advice is to only conduct such STO offerings when the administration has legalized them.
STO or Security Token Offerings
An STO is similar to an ICO (initial coin offerings), in which a firm sells the crypto tokens to the public in order to elevate funds. Nevertheless, Security token offerings also let the token holders share in the revenues of a firm based which is based on the underlying asset.
Huo further went on to say that Beijing needs a broad-spectrum wealth management organization that requires management of high-net-worth customer funds of over $30 million dollars and wealth of people. Thus, the city needs a diversified wealth management organization which will determine the direction of the city’s future wealth management.
He also suggested that planning should be done first in order to develop the wealth management industry which includes a well-planned infrastructure, a good carrying area, good environment, and well-planned system. And special attention must be paid to the development of a sound financial services infrastructure at the Tongzhu Sub-center.
Huo also emphasized that so many institutions consider wealth management as the future market growth point, even though they don’t have a license to purchase it. Also, he warned institutions not to develop sales of wealth management products without a legal license.
Government measures against token fundraising
The Chinese officials have been taking proper measures against token fundraising since September last year when the PBoC (people’s bank of China) prohibited initial coin offerings outright. And it issued a notice warning the crypto exchanges to cease and desist operations.
In November 2018, the People’s Bank of China announced it would clamp down on free issuance of digital tokens called airdrops. And in summer this year, Pan Gongsheng the vice president of PBoC, said that the central bank has planned to hit back hard against the Initial Coin Offerings Projects that had gone overseas but continued to deal with the investors in China. He also said that if any new financial product is not licensed under the present legal framework then they will cease such firms immediately.
In August this year, the finance department of Guangzhou development district released a notice to all the local businesses warning them from hosting any crypto-based events or promotions.