Context

A few years ago, China was the undisputed central hub of cryptocurrency activities until recently that the Chinese government began to sponsor rumors about the illegality of the much valuable coins. Some months ago, the Chinese government with the help of several media and online news outlet aided an assault on Initial Coin Offerings (ICOs) labeling it a fraud and illegal act. Eventually, an indefinite ban was placed on all cryptocurrency activities in China.

In their justification of the untoward act, the Chinese government stated the ban on ICOs and cryptocurrency was exerted as the part of their effort to guide against illegal financial activities such as pyramid funding, multilevel marketing and other illicit acts. While it is partly through that, some bad eggs play on the innocent of many investors; it is surprising that the Chinese government completely overlooked many laudable benefits ICOs, STO and cryptocurrency render.



Another Western Threat

For instance, ICO and STO’s help investors in raising the potentials of diverse blockchain projects since funding is the principal barrier to the success of many entrepreneurial and innovative projects. Since the advent of cryptocurrency some years ago, China has produced more billionaires in dollars compared to many other countries which are part of the bedrock of Chinese rise in fortune as one of the fastest growing economies in the world.

Chinese Social Media Giants instead of Google, Facebook etc.

Another point tendered by the Chinese government for their injustice action is their projected protection of indigenous companies. While the Chinese government has openly funded indigenous blockchain project in China, the claim that war against STO is synonymous to a policy against the use of Western Social Media platforms such Google for Baidu, Facebook for WeChat and several other content sharing sites is nothing but a bogus claim lacking solid points.

The underlying reasons for their action have been unraveled in many websites which have been eluded of the necessary publicity, no thanks to the Chinese government media agents.

Is STO the Same as ICO? Chinese Media Thinks So

In all fairness, STO doesn’t in anyway fall into the category of blockchain project the Chinese government should attack. Unlike the other crowdfunding platforms, STO issues security tokens supported by real assets which are often a stake in the company responsible for issue the security. STOs complies with other traditional securities guidelines, as such, they deserve to be treated the same way. STOs complies with securities laws and are approved by the securities regulators.

Also, while ICO works from business offering to the crowd – from coin to utilities and currencies, STO stands apart in that it is for investors who pay and are in possession of security like share, revenue, equity, etc. Any companies or businesses partaking in STO are mandated to register with SEC, a process which is not only demanding but expensive as well.

The Chinese government despite stating that cryptocurrency-related activities are banned from enforcing strict control of capital, a guide to prevent the Yuan from spreading to other countries, however, the hidden truth is their collaboration with the banks to deny the public the liberation that cryptocurrency offers to users.

No control, No Fun

Since the bank does not regulate cryptocurrencies, they struggle to have full control over people’s money, as thus, they fail woefully in reaching the government’s humongous demand from them. For this reason, both the banks and the Chinese government will do everything in their power to completely exterminate the use of cryptocurrency and every other activity related to it including the STO. This will enable them to keep the populations under the control and manipulations of the accomplice – the banks in China.

According to a statement from the Global Times editorial, “Bitcoin is an innovation China cannot say ’no’ to. Just like Bitcoin and other cryptocurrency and the Security Tokens, banning will not be a lasting solution. As Xiao Xin, the author of the editorial quipped.

“A more fundamental approach would be to embrace the new technology without putting the country’s financial system at stake.”

Shutting off ICOs, STOs and cryptocurrency trading is truly an effort to exert the governments’ monopoly and promote the ripping off of banking system on the people of China. It is entirely an action which questions traditional regulations and rational thinking.

Is The Strategy Right?

The Chinese government and the Banks in China out of a perceived threat to their extortion and dominance consider totally crushing cryptocurrencies, ICOs, and STOs as a way to preserve their power. Although this might look like the right step presently, sooner or later, it will only set China backward in global digital currency revolution.

Also, crushing cryptocurrency will prevent the Chinese government from making the giant leap forward from imitating foreign technology and developing its own as cryptocurrencies are great innovations that could be a drive in helping them achieve their goal.

Conclusively, STO is a powerful tool which can aid the transition of China from an emerging country to a developed nation as long as the government regulates the blockchain community rather than killing it.