Announcement on Preventing Risks from Token Offering Financing

Recently, financing activities involving the issuance of tokens, including initial coin offerings (ICOs), have proliferated in China. Speculation has been rife, and these activities are suspected of involving illegal financial activities and have seriously disrupted the economic and financial order. To implement the guiding principles of the National Financial Work Conference, protect investors' lawful rights and interests, and prevent and resolve financial risks, the following matters are hereby announced pursuant to laws and regulations including the Law of the People's Republic of China on the People's Bank of China, the Commercial Bank Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Cybersecurity Law of the People's Republic of China, the Telecommunications Regulations of the People's Republic of China, and the Measures for Banning Illegal Financial Institutions and Illegal Financial Business Activities:

I. Correctly understand the essential nature of token issuance financing activities

Token issuance financing refers to financing entities raising so-called 'virtual currencies', such as Bitcoin and Ether, from investors through the unlawful sale and circulation of tokens. In essence, it constitutes unauthorized and illegal public financing and is suspected of involving unlawful sales of token vouchers, unlawful securities issuance, illegal fundraising, financial fraud, pyramid schemes, and other illegal or criminal activities. The relevant authorities will closely monitor developments, strengthen coordination with judicial authorities and local governments, strictly enforce the law under existing working mechanisms, and resolutely address market disorder. Suspected criminal matters will be referred to the judicial authorities.

Tokens or 'virtual currencies' used in token issuance financing are not issued by monetary authorities. They lack monetary attributes such as legal tender status and compulsory acceptance, do not have a legal status equivalent to currency, and cannot and should not circulate or be used as currency in the market.

II. No organization or individual may unlawfully engage in token issuance financing activities

From the date of this Announcement, all forms of token issuance financing activities must cease immediately. Organizations and individuals that have already completed token issuance financing must make arrangements for returning funds and winding down the activities, reasonably protect investors' rights and interests, and properly address the risks. The relevant authorities will, in accordance with the law, rigorously investigate and deal with token issuance financing activities that refuse to cease, as well as unlawful or non-compliant conduct in completed token issuance financing projects.

III. Strengthen the administration of token financing trading platforms

From the date of this Announcement, no so-called token financing trading platform may engage in exchange business between legal tender and tokens or 'virtual currencies'; buy or sell tokens or 'virtual currencies', or act as a central counterparty in their purchase or sale; or provide pricing, information intermediation, or other services for tokens or 'virtual currencies'.

For token financing trading platforms with unlawful or non-compliant activities, financial regulatory authorities will request the telecommunications authorities to close their websites, platforms, and mobile apps in accordance with the law; request the cyberspace authorities to remove their mobile apps from app stores; and request the industry and commerce authorities to revoke their business licences in accordance with the law.

IV. Financial institutions and non-bank payment institutions must not conduct business related to token issuance financing and trading

Financial institutions and non-bank payment institutions must not, directly or indirectly, provide products or services such as account opening, registration, trading, clearing, or settlement for token issuance financing or 'virtual currencies'. They must not underwrite insurance business related to tokens or 'virtual currencies', or include tokens or 'virtual currencies' within the scope of insurance coverage. If financial institutions or non-bank payment institutions discover indications of unlawful or non-compliant token issuance financing and trading, they must promptly report them to the relevant authorities.

V. The public should remain highly alert to the risks of token issuance financing and trading

Token issuance financing and trading entail multiple risks, including fictitious assets, business failure, and speculative investment. Investors must bear investment risks themselves and are urged to guard against deception and fraud.

The public should strengthen awareness of risk prevention and the ability to identify unlawful financial activities conducted under various names involving 'coins', and promptly report indications of relevant unlawful or non-compliant conduct.

VI. Fully exercise the self-regulatory role of industry organizations

Financial industry organizations should explain the policies, urge their members to consciously resist unlawful financial activities involving token issuance financing and trading or 'virtual currencies', stay clear of market disorder, strengthen investor education, and jointly maintain normal financial order.