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

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Coindesk | by Wolfie Zhao | Sep 5, 2017

China declares ICOs illegal - China's ICO Ban: A Full Translation of Regulator Remarks

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.

See:  SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities

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.

See:  So You Want to (Legally) Raise an ICO?

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.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at

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