China's ICO Ban: A Full Translation of Regulator Remarks

FEATURE
Wolfie Zhao
Sep 5, 2017 at 14:00 UTC  |  Updated  Sep 6, 2017 at 14:17 UTC

The following is a full translation of statements by China's financial regulators outlining a recent ban on initial coin offerings. 


Recently, a number of token fundraising activities in the country, including initial coin offerings, have emerged for the purposes of financing and speculation. Such [sales] are considered illegal and disruptive to economic and financial stability.

In order to be compliant with the messages conveyed during the National Financial Work Conference, to protect the legal rights of investors and to prevent financial risks, we have the following announcement.

The statement is based on the law of the People's Republic of China, as well as the laws of the People's Bank of China, commercial banking and securities law, cybersecurity and telecommunications law, and financing and financial activities law.

1. An accurate acknowledgement of the nature of ICOs

"Token fundraising" refers to a process where fundraisers distribute digital tokens to investors who make financial contributions in the form of cryptocurrencies such as bitcoin and ether.

By nature, it is an unauthorized and illegal public financing activity, which involves financial crimes such as the illegal distribution of financial tokens, the illegal issuance of securities and illegal fundraising, financial fraud and pyramid scheme.

Relevant authorities will closely monitor the latest market status and collaborate with the justice department and local governments.

Altogether, they will strictly enforce the current legal framework to solve the market chaos. Any criminal suspicion will be handed over to the justice department.

The tokens or "cryptocurrencies" that are distributed during the token fundraising are not issued by the monetary authority, which has no legal property as fiat currency does and cannot circulate in the monetary market.

Any organization or individual is prohibited from starting illegal token fundraising activity

Starting from the date of this announcement, all kinds of fundraising activities through token issuance should stop immediately.

Organizations and individuals who have completed token fundraising previously shall make arrangements such as refunding crypto assets to investors to protect investor rights, and to deal with the risks properly.

Relevant law enforcements will investigate and severely punish those who refuse to halt fundraising activities through token issuance and those whose completed token fundraising activates are found to have violated the law or regulation.

Reinforce the supervision on platforms that provide exchange services for tokens issued during the fund raising

Starting from the date of this announcement, any so-called token exchange platform shall not:

  • Be involved in offering exchange services between fiat currency and tokens
  • Buy or sell tokens for cryptocurrencies, or act as a central party facilitating the trading of tokens for cryptocurrencies
  • Provide price bidding or middleman service for the exchange of tokens for cryptocurrency.

For any token exchange platform that violates the law or regulation, financial authorities will request:

  • The telecommunication department to shut down its website and mobile application.
  • The Cyberspace Administration of China to delist its mobile application from app stores.
  • The State Administration for Industry and Commerce to discard its business license.

No financial institutions or non-banking payment institutions shall operate businesses that deal with token fundraising

All financial institutions and non-banking payment institutions shall not directly or indirectly provide account opening, registration, trading, clearing and settlement services for token fundraising activities; shall not underwrite any insurance policy that relates to tokens and cryptocurrency, or include any token and cryptocurrency under the insurance policy coverage.

Should any financial institution and non-banking payment institution be found in violation of the law or regulation, they should be reported to relevant authorities immediately. The public should be highly vigilant about potential risks that come with token fundraising and trading.

Token fund raising and trading pose multiple risks, including fraudulent assets, business operational failure, and speculation, etc. Investors are responsible for taking such risks themselves and thus are advised to remain cautious on suspicious projects.

For any illegal financing activity that operates under the name of "coin," the public should become better at spotting scams and always stay vigilant against risks, and should report to the authority any lead of law and regulation violation.

Industry Organizations Should be Self-disciplined.

Different financial industry organizations should study the regulation well and have member companies to voluntarily fight against any illegal financial activity that relates to token and cryptocurrency fund raising; should stay away from this market chaos; should improve the education for investors; and jointly maintain the financial stability.

Read the original statement in full below:

中国人'"行 中央'信办 工业'信息-部 工商总局 "'会 证'会 保'会...于防范代币'行融资风险的...'

'期,国...通过'行代币形式...括-次代币'行(ICO)进行融资的活动大量涌现,投机 '作盛行,涉嫌从事非法'融活动,严重扰乱了经济'融秩序。为贯彻落实...国'融工作 会议精神,保护投资...合法权益,防范-解'融风险,依据《中华人'...'国人'"行法 》、《中华人'...'国商业"行法》、《中华人'...'国证券法》、《中华人'...'国' 络安...法》、《中华人'...'国"信条例》、《非法'融机构'非法'融业务活动-"办 法》等法律法规,现将有...事项...'如下:

一、准确认识代币'行融资活动的本质属性

代币'行融资是指融资主"通过代币的违规'"、流通,'投资...筹集"特币、以太币 等所""虚拟货币",本质上是一种未经批准非法...开融资的行为,涉嫌非法'"代币票 券、非法'行证券以及非法集资、'融诈--、传"等违法犯罪活动。有...部--将密切'测 有...动态,加强与司法部--'地-"府的工作协同,按...现行工作机制,严格执法,坚决 治理市场乱象。'现涉嫌犯罪--题,将移送司法机...。

代币'行融资中使"的代币-"虚拟货币"不"货币"局'行,不...有法偿性与强制性等 货币属性,不...有与货币等同的法律地位,不能也不"作为货币在市场上流通使"。

二、任何组织'个人不--非法从事代币'行融资活动

本...''布之--起,各类代币'行融资活动""立即停止。已完成代币'行融资的组织' 个人""做出...退等安',合理保护投资...权益,妥-处置风险。有...部--将依法严肃查 处'不停止的代币'行融资活动以及已完成的代币'行融资项目中的违法违规行为。

三、加强代币融资交"平台的管理

本...''布之--起,任何所"的代币融资交"平台不--从事法定货币与代币、"虚拟货币 "相'之--的...'换业务,不--买--作为中央对手-买-代币-"虚拟货币",不--为代 币-"虚拟货币"提供定价、信息中介等服务。

对于存在违法违规--题的代币融资交"平台,'融管理部--将提请"信主管部--依法...-- ...'站平台及移动APP,提请'信部--对移动APP在""商--做下架处置,并提请工商管 理部--依法吊"...营业执...。

四、各'融机构'非"行"付机构不--开展与代币'行融资交"相...的业务

各'融机构'非"行"付机构不--直接---接为代币'行融资'"虚拟货币"提供账户开 立、登记、交"、...--、"--等产"-服务,不--承保与代币'"虚拟货币"相...的保险 业务-将代币'"虚拟货币"纳...保险责任范围。'融机构'非"行"付机构'现代币' 行融资交"违法违规线索的,""及--'有...部--报'。

"、社会...--""高度警惕代币'行融资与交"的风险隐患

代币'行融资与交"存在多重风险,...括虚假资产风险、经营失败风险、投资'作风险等,投资...须自行承...投资风险,希望广大投资...谨防上"----。

对各类使""币"的名称开展的非法'融活动,社会...--""强-风险防范意识'识别能 力,及--举报相...违法违规线索。

...、......分'挥行业组织的自律作"

各类'融行业组织""做好"-解读,督促会'单位自觉抵制与代币'行融资交"及"虚 拟货币"相...的非法'融活动,远离市场乱象,加强投资...教育,...同维护正常的'融秩

Calligraphy image via Shutterstock

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