Central Bank Governor Of China: STOs Are ‘An Illegal Financial Activity’

The People’s Bank of China (PBoC) which is the central bank in the country, recently highlighted the illegality of Security Token Offerings (STOs) in the country.

According to the latest crypto news as reported by the English-language outlet South China Morning Post (SCMP), a deputy governor of the China central bank named Pan Gongsheng reportedly said in a summit in Beijing that ‘illegal’ financing activities through STOs and ICOs “were still rampant in the mainland despite the nationwide clean-up of the market last year.”

Gongsheng also stated that if the government hadn’t stepped in, the chaos of the crypto market could have hurt the overall financial stability in the country. The central bank official also said that “the STO business that has surfaced recently is still essentially an illegal financial activity in China.”

As he wrote, the state of cryptocurrencies is associated with crime, saying that “virtual money has become an accomplice to many illegal and criminal activities.”

According to this article, Gongsheng noted that “most of the financing operations conducted through ICOs in China were suspected of being illegal fundraising, pyramid sales schemes and other financial fraud.”

In the article, he also mentions that the chief of the Bureau of Financial Work in the country, Huo Xuewen, warned against STOs about a week ago, stating:

“I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.”

Meanwhile, blockchain adoption has been relatively embraced in China and is in a completely different type of regulation and adoption compared to crypto. The legal basis of blockchain can be assumed to be the Chinese Supreme Court’s ruling from September which saw blockchain legally authenticating evidence in the country.