Beijing Internet Finance Industry Association (BIFIA), a self-regulatory body focused on online finance in China, released a statement on Mar.21 warning against illegal financial activities involved with ICO, IEO, STO, Stable coins and other cryptocurrency/token-based fundraising alternatives.

It reinforced the Chinese government’s stringent attitude towards ICO (Initial Coin Offering), which has been classified as a form of unauthorized and illegal fundraising and strictly banned since Sep. 2017.

The Association claims that some crypto start-ups, taking the opportunity to speculate on the concept of blockchain, are promoting ICOs, IEOs, STOs, stable coins, tokens, and cryptocurrencies and soliciting investors who actually have little knowledge of these novel concepts, which disrupts the normal financial and economic order and brings social risks. It reminds all financial institutions and individuals that all financial business and activities need to be included in the scope of national supervision. Take “STO” for example, STO, Security Token Offering, is an illegal financial activity. Groups involved in such activities will be severely punished by eviction, closure of the website platform, taking down mobile app, and even revocation of business license.

“In order to create a healthy financial environment and protect the legitimate rights and interests of financial consumers”, the association reminds that

1. All institutions and individuals should strictly abide by national laws and jointly resist the illegal fundraising and promotion of such activities in the names of ‘virtual currency’, ‘blockchain’, ‘ICO’, ‘STO’, ‘stable coin’, and other variants.
2. Please stay vigilant to all kinds of alterations of illegal fundraising like IFO, IEO, IMO that fraudsters could use in the name of “sharing economy”, “token economy”, “crowdfunding”, “consensus economy”, etc.”
3. Investors should take a rational view on blockchain, do not blindly believe in the promise of high returns, establish a correct monetary concept and investment philosophy, and increase awareness of potential risks, the statement reads.

The warning comes at a time when IEO is showing strong growth in full swing in the country.  The “Big Three” crypto exchanges – Binance, Huobi and OKEx, which have moved out of the country following the ICO ban, are receiving significant attention since they adopted the IEO mode. Seeing the great success of IEO in its early days, more exchanges are following suit, including Bittrex, BitMax, KuCoin and ZB.com.

An IEO (Initial Exchange Offering) is the latest craze sweeping the crypto community. As its name suggests, it is conducted on the platform of a crypto exchange. Compared to Initial Coin Offering (ICO), an IEO is administered by a crypto exchange on behalf of the startup that seeks to raise funds with its newly issued tokens.

China has reinforced its determination to crack down all activities involved with ICO since September 2017. The Association has issued similar warnings last Jan and December when IMO and STO are emerging. While the warnings, keeping coming after a while, seem to have few impacts on the market sentiment. Investors in the country seem to have been immune to these warnings, or more precisely FUDs in their eyes, continuing their crypto career.