What are STOs?
Security Token Offerings (STOs) are not much different from ICOs, except for one major difference that tokens offered through STOs offer investors proceedings from profits made by the platform. This is just like dividends from securities in a traditional setup.
ICOs had stepped around the loophole initially with declaring their tokens as “utility” ones which do not present a share in the organization. STOs were launched by platforms in order to represent proper securities that would be in line with traditional securities.
Beijing, however, is not accepting of STOs either.
China has been systematically cracking down on cryptocurrencies and the latest statement makes it even more difficult for crypto issuers to do business in the country- at least in Beijing.
Peoples’ Bank of China (PBoC) had put a blanket ban on ICOsin September last year. This had forced token issuing platforms and exchanges to cease operations in the country. Not to be outdone, the crypto parties had simply shifted their operations outside the country, but continued to offer services to Chinese residents through middlemen and airdrops.
PBoC retaliated a few months ago with a stern warning that middlemen operators and airdrops are illegal too, “Any new financial product or phenomenon that is not authorized under the existing legal framework, we will crush them as soon as they dare to surface.”
Now, the government has put another nail in the crypto coffin with Beijing banning STOs within the city limits.