Statement on Prevention of Risks in Fundraising Through Token Offering Issued by Seven Government Administrations in China

4 min readSep 6, 2017

This statement was issued by the following government administrations on September 4, 2017:

People’s Bank of China
Cyberspace Administration of China
Ministry of Industry and Information Technology of the People’s Republic of China
State Administration for Industry and Commerce of the People’s Republic of China
China Banking Regulatory Commission
China Securities Regulatory Commission
China Insurance Regulatory Commission

Below is the content of the statement.

Recently, there were a lot of fundraising activities in China by the means of token offerings including the Initial Coin Offerings (ICO), and the speculation prevails. These activities were suspected to be illegal financial activities and had seriously disturbed the economic and financial order. In order to implement the principles set up by the National Financial Work Meeting, protect the legal interests of the investors, prevent and resolve the financial risks, we hereby make the following statement on the relevant issues according to the Law of the People’s Bank of the People’s Republic of China, the Law of Commercial Banks of the People’s Republic of China, the Security Law of the People’s Republic of China, the Law on Cyberspace Security of the People’s Republic of China, the Telecommunication Regulations of the People’s Republic of China, the Measures on Revoking the Illegal Financial Institutions and Illegal Financial Activities, and etc.:

1. To accurately understand the essential nature of fundraising activities through token offerings

The fundraising activities through token offerings refer to the activities that the fundraising subjects raise so-called “virtual currencies” such as Bitcoin, Ethereum, etc. from the investors by illegal offering, selling and circulating tokens. In essence, they are illegal pubic fundraising activities without approval. They are suspected to be illegal or criminal activities such as illegal offering and selling of tokens or bills, illegal offering of securities and illegal fundraising, financial scam, pyramid selling, etc.. The relevant authorities will closely monitor the relevant development, strengthen the collaboration with the judicial department and the local governments, enforce the law strictly, and firmly regulate the market chaos according to the current working mechanism. If any suspected crime is discovered, it will be handed over to the judicial department.

The token or “virtual currencies” used in the fundraising activities through token offerings are not issued by the authority, and do not have the nature of currencies such as the legal tender and mandatory use status. They do not enjoy the same legal status as currencies, and they cannot and should not be used and circulated in the market as currencies.

2. No organization and individual shall illegally engage in the fundraising activities through token offerings

From the date of the issuance of this statement, all kinds of fundraising activities through token offerings shall cease immediately. Those organizations and individuals who have completed fundraising through token offerings shall make the arrangement to return funds, reasonably protect the interests of investors, and handle the risks properly. The relevant authorities will, according to the law, seriously investigate and deal with the fundraising activities through token offerings which refuse to stop, and the illegal activities involved in the fundraising projects through token offerings which are completed.

3. Enhance the management of token fundraising and trading platforms

From the date of the issuance of this statement, no so-called token fundraising and trading platform shall engage in the exchange between the legal currencies and tokens, or among the “virtual currencies”, nor shall they buy and sell or act as the central counter party to buy and sell tokens or “virtual currencies”, nor shall they provide pricing or intermediary services for tokens or “virtual currencies”.

For token fundraising and trading platforms which have non-compliance issues, the financial administration authority will ask the telecommunication authority to close the internet connection to their websites and mobile phone APPs according to the law, ask the cyberspace authority to remove their mobile phone APPs from the App Stores, and ask the administration authority for industry and commerce to revoke their business licenses according to the law.

4. Financial institutions and non-banking payment institutions shall not implement businesses relating to token offering, fundraising and trading

The financial institutions and non-banking payment institutions shall not, directly or indirectly, provide account opening, registration, trading, liquidating, settlement services or products to fundraising activities through token offerings and “virtual currencies”, nor shall they underwrite insurances relating to tokens and “virtual currencies” or include tokens and “virtual currencies” in the scope of insurance liabilities. If the financial institutions and non-banking payment institutions discover non-compliance clues in token offering, fundraising and trading, they shall report to the relevant authorities in a timely manner.

5. The public shall be highly alert to the potential risks of token offering, fundraising and trading

There are multiple risks in the token offering, fundraising and trading, including the risks of false assets, the risks of business failure, the risks of speculation, and etc.. The investors shall take the investment risks by themselves. The investors shall be cautious to avoid being deceived.

For various illegal financial activities implemented in the name of “coins”, the public shall enhance the risk prevention awareness and the ability of identification, and report the relevant non-compliance clues in a timely manner.

6. Make full use of the self-discipline function of the industry society

Various financial industry societies shall well interpret the policy, and supervise its members to boycott the illegal financial activities relating to token offering, fundraising and trading and “virtual currencies”. Stay away from the market chaos, enhance the investors education, and maintain the normal financial order together.