In what is a first, a government body is now indicating that security token offerings are illegal. Commonly called STOs, these token offerings have seen a rise in popularity. This has occured as the industry shifts away from ICOs. This shift has largely occurred due to the perceived STO adherence to regulations.
Chief of the Beijing Municipal Bureau of Finance, Huo Xuewen, stated, “The ICO (initial coin offering) model is getting left behind for a new concept called STO. I want to issue a warning to anyone considering running an STO in Beijing…Don’t do it in Beijing – it is illegal. You can only engage in such activities with the approval from the government.”
While no other country has indicated thus far that STOs may be viewed as illegal, it is disconcerting that this may be the case in one of the world’s largest economies.
Beijing Municipal Bureau of Finance
This branch of government is tasked with various things. Among managing city expenditures, one such task is to ‘supervise the enforcement of financial and taxation guidelines, policies, laws and regulations’. With the expectation that enforcement of regulations will occur, it seems appropriate that the message discussed today should come from the BMBF.
2018 Global Wealth Management Forum
Held yearly, this gathering takes place as an open forum where the BMBF discusses wealth management. Discussions deal with regulations, future plans, expenditures, etc., with regards to Beijing. It is on this stage that the Chief of the BMBF, Huo Xuewen, spoke on the status of STOs.
This year’s iteration took place on December 1. The full transcript of the Xuewen speech can be found HERE.
In all reality, this announcement by Beijing should come as no surprise. Over the past 2 years, the city has made the news various times in their attempt to stifle the blockchain industry.
Beginning in September of 2017, Beijing was one of the first regions to ban ICOs altogether. A ban that remains to this day.
Beyond the ICO ban, we have seen Beijing enforce various regulations. These restrict business within the city from promoting/hosting/displaying anything related to cryptocurrencies.
With actions such as these having already taken place, a continuation of this trend should be expected. It is reassuring, however, that despite the Beijing government attempting to stifle the industry, it continues to thrive. This resistance to outside control is often cited as a main ideological draw for many towards blockchain and its various sectors.
Actions such as these may bring worry to some, as we ask the question ‘are we in denial?’ Is this something that may occur outside of China? Thankfully, no. Although the legality of ICOs can sometimes be called into question, STOs have shown no indication of backlash from other governments. Although this news may be bad for those in Beijing, it should have no effect on the rapid development of digital security related services and offerings. The only thing this will accomplish is triggering an exodus of talent and companies from the region to more friendly climates.