STO’s are “Illegal” in China. Both issuance and promotion is banned.

At a recent forum, Chinese financial officer Huo Xuven declared illegal the use of security tokens (STO). While the rest of the world seems to be turning from the Initial Coin Offerings (ICOs) to the STOs for their advantages and clearer regulatory requirements, the shift is unlikely to occur on Chinese soil.

China’s position on the regulation of security tokens is explained
Ho Xuven is head of the Beijing Municipal Finance Bureau. He recently clarified China’s position on the emerging security tokens industry.

Without any ambiguity, Huo explicitly stated that the Tokenized Securities Offerings are “illegal” in China.

At a recent capital management forum organized by the Chinese Finance Bureau, Huo made the following comment:

“I will provide a risk warning to those who propagate in Beijing and want to publish [STO]. Do not do this in Beijing. If you do this in Beijing, you will be fired for illegal financial activities. ”

What exactly are security tokens?
Security signs entail the integration of the capital markets industry and distributed ledger technology (DLT). This technology offers numerous advantages over traditional financial securities.

Despite Huo’s recent comments, security tokens continue to demonstrate implementation in other parts of the world.

For example, the first US REIT was issued by Harbor. In addition, many other assets in the real world have experienced the benefits of tokenization in the past few months: luxury real estate, stocks, investment funds, visual arts, and even items like gold.

STO is like the traditional ICO when it comes to fundraising. However, security tokens can also provide tokens holders with a share in the profits of a company or asset’s profits over time.

Security Tokens also prioritize compliance with regulatory unlike ambiguous ICOs. The reason for this is simple: security tokens include the tokenization of an asset that was subject to the rules of the securities long before the blockchain technology appeared.

Given the current situation, compatible security tokens have much more “peace of mind” compared to ICO. Consequently, some companies abolished ICOs and turned to STOs as a compatible fundraising tool.

Many consider Malta to be the current leader in legislative support for security tokens. Others argue that existing securities laws in the United States will be sufficient for security tokens without any additional laws.

As the situation continues to evolve, one thing is certain: Beijing will not support security token offerings in the nearest future.

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