Recently, China’s Beijing Finance Industry Association released a notice saying that all individuals and banks must stop engaging in ICO and STO activities, among other things that “encouraged speculation.”
Termed “solicited illegal financial activities”, the notice released by the group revealed a strict view of fundraising mechanisms, specifically labeling them as means of “illegal public financing.”
A new statement released by China’s Securities and Futures Commission first describes the rules surrounding investment in securities, which it then applies to STOs. As is the case with traditional securities, Hong Kong expects STOs to be available only to professional investors – or those with $1 million or higher.
The purported reason for this is that authorities find STOs to be risky investments, and as such should only be made available to those who possess large sums of money. This would appear rather unfair to many crypto investors, who may not possess so much capital but have a better understanding of how this peculiar market works.
Furthermore, foreign entities can no longer target Hong Kong without obtaining a local license first. After which, they must communicate clearly all relevant aspects of the token on offering, encourage investors to do their research and make themselves available to only professional investors. Failing any of these will mean a loss of the license and/or disciplinary action. The statement reads,
Intermediaries are reminded to implement adequate systems and controls to ensure compliance with the requirements before they engage in the distribution of STOs. Failure to do so may affect their fitness and properness to remain licensed or registered and may result in disciplinary action by the SFC.
While China has somewhat of an ambivalent approach to cryptocurrency, on the one hand granting it great exposure through television and hopeful about its impact potential to digitize their economy, on the other it is extremely harsh when it comes to ICOs.