It seems China really wants to give cryptocurrencies a hard time. The country has always been strict against the blockchain and crypto industry, and now it’s taking that to another level. Beijing has just declared Security Token Offerings, or STOs, illegal.

Beijing Bans STOs

So for those who may be unfamiliar, an STO creates an investment offer by tokenizing stocks or bonds and putting them on a blockchain.

An ICO raises funds for a company by selling tokens to the public. However, an STO gives holders stocks or shares in the company, and the ability to share a company’s profits through dividends.

China is always one step ahead, and the Government is well aware of the ‘update’ to the common ICO. At a wealth management forum over the weekend, Huo Xuewen, chief of Beijing’s Municipal Bureau of Finance, said the following:

“The ICO model is getting left behind for a new concept called STO. I want to issue a warning to anyone considering running an STO in Beijing. Don’t do it in Beijing–it is illegal. You can only engage in such activities with the approval from the government.”

Blockchain

STOs have become the latest mania to replace ICOs. Blockchain startups, in particular, seem to be favoring them, so much so that STOs are projected to have a market cap of $10 trillion by 2020, according to Ernst & Young.