STOs Essentially Illegal in China, Says Central Bank Deputy Governor

Echoing the statements of others in the Chinese government, the deputy governor of China's central bank gives his verdict on the legality of STOs.

After it banned initial coin offerings in the middle of 2017, it seems that China isn’t going to give security token offerings a chance to exist in the first place.

Before the phenomenon even got its feet wet in the country, deputy governor Pan Gongsheng of the People’s Bank of China addressed the sale of security tokens explicitly during a speech at a Beijing digital finance forum, the South China Morning Postreports.

“The STO business that has surfaced recently is still essentially an illegal financial activity in China. Virtual money has become an accomplice to all kinds of illegal and criminal activities,” he said.

Prior to banning the digital assets trade, China was the world’s largest market for cryptocurrencies, with roughly four out of every five transactions happening there.

Just over a week ago, Huo Xuewen, the chief of Beijing’s Municipal Bureau of Finance said that STOs were off-limits in the city. Still, there was a silence in the central government until Pan spoke about the issue, hammering the final nail in the coffin of any hopes that security tokens would be welcome in the country.

The timing of the speech indicates that China was anticipating interest from citizens in STO investment. Making such a thing illegal, however, won’t necessarily make it disappear.

State-run media in China recently reported on the fact that companies related to digital assets that used to operate in the mainland have”defiantly” moved their headquartersto other parts of Asia and continue to serve their previous customers.

CNR cited OKCoin—which recently moved its headquarters to Hong Kong—as one of the exchanges, alleging through a source known only as “Mr. Yang” that the company continues to do most of its business out of Beijing, catering to Chinese customers.