A local newspaper in China, named South China Morning Post, reported breaking news about security token offerings (STOs), on December 9. The People’s Bank of China (PBoC), which is the central bank of the country, declared STOs as illegal and highlighted the repercussions if found guilty.
The deputy governor of China, Pan Gongsheng expressed his disapproval in a Beijing Summit, over the illegal financing activities being carried out across the country. A major clean-up of the cryptocurrency was carried out nationwide last year. Regardless of this, the use of STOs and ICOs (Initial Coin Offerings) was still pandemic in the mainland. He stated that the disarrayed crypto market could have caused an imbalance to the overall financial stability in China, had the government not interfered.
The Central Bank stressed again that the STO business has come to light yet again and is still an illegal activity all over China. Gongsheng repeated his outlook about cryptocurrencies being associated with crime. According to him, virtual money has turned out to be an accessory to all types of criminal and illegal activities. He mentioned that he suspected that financing operations of ICOs were mostly carried out through illegal fundraising, pyramid sales schemes, and other financial frauds.
The article in the Morning Post also mentioned Huo Xuewen’s, the Head of the Bureau of Financial Work. He had already warned everyone about the implications of STOs earlier. He said that the individuals who are promoting STO fundraising in Beijing would be kicked out of Beijing if they do not stop it.
On the contrary, blockchain adoption, the technology behind most cryptocurrencies, has been accepted in China. According to a recent article by Coin Telegraph, the Chinese Internet Court has started using blockchain for the protection of intellectual property rights of the online writers. The legality of this development can be attributed to the Chinese Supreme Court, which came in ruling from September 9. They have authorized that blockchain can legally validate evidence.