Pan Gongsheng, Vice Governor of the Central Bank: Both ICO and STO are illegal in China

category:Internet
 Pan Gongsheng, Vice Governor of the Central Bank: Both ICO and STO are illegal in China


China began to clean up the Bitcoin trading platform in 2017. Before that, at one time, more than 80% of the worlds virtual currency transactions and ICO financing took place in China. If today is the same as in the first half of 2017, you can imagine what it will be like. Pan Gongsheng, deputy governor of the Peoples Bank of China and director of the State Administration of Foreign Exchange, said.

On December 8, at the second China Internet Finance Forum in 2018, Pan Gongsheng said that after Chinas intensification of the clean-up and renovation of virtual currency trading platforms, some platforms have been transferred overseas, but they still provide trading services to Chinese residents. Its nature is still illegal financial activities in China, and it belongs to the object of clean-up, renovation and blockade. u3002

ICO financing subjects are mixed, which is essentially an unauthorized illegal public financing behavior, and the financing operation is suspected of illegal fund-raising, network pyramid selling, financial fraud. The recently proposed STO (Security Token Offering) is still essentially an illegal financial activity in China. Pan Gongsheng said.

Virtual money has also become an accomplice to all kinds of illegal and criminal activities. Illegal elements use virtual money to launder criminal income, evade taxes and tax evasion, and even finance terrorist activities. Pan Gongsheng said.

In recent years, Internet finance, financial technology and other rapid rise, covering payment, lending, securities, insurance, financial services and other fields. While making progress in Internet finance in China, there are also some experiences and lessons that need to be summarized and considered. The supervision of some sub-industries lags behind the development and innovation of the market. Some practitioners lack legal awareness, risk awareness, compliance awareness and consumer protection awareness. Some even advance under the guise of financial innovation. Illegal fund-raising, pyramid selling, fraud and other illegal and criminal activities.

Pan Gongsheng pointed out that before that, some of the risk incidents of P2P network lending platform were thought-provoking. The development direction of some platforms deviates from the original intention of the industry, and the network lending platforms originally positioned as financial information intermediaries have appeared in the actual operation such as private capital pools, dismantling and packaging of tenders, mismatching of deadlines, alienating into credit intermediaries; some platforms have no real risk control, and the role of information technology can not be discussed; Taiwan has even evolved into a Ponzi scheme. With the joint efforts of all parties, the overall risk level in the field of individual network lending has declined in recent years. Pan Gongsheng said.

He also said that the frequent occurrence of cash loans and campus loans has led to over-borrowing, violent collection, high rates, violations of personal privacy and many other problems; lack of proper management of borrowers by practitioners, violations of the rights and interests of financial consumers occur from time to time. In order to expand rapidly and on a large scale, some institutions induce customers to over-borrow, multi-borrow, or even lend to non-income groups. Some organizations form high interest rates, high fees, violent collection business models. Others illegally sell and abuse personal information of customers and infringe on the legitimate rights and interests of citizens.

Internet finance is still finance, financial science and technology is finance or science and technology? Pan Gongsheng believes that if the essence of financial science and technology is also finance, it means that if we cant put on the coat of science and technology, it will become not finance, but finance must follow the rules of finance. It is the natural orientation of science and technology to provide support and services for finance. Whether it is a financial institution or an Internet enterprise, whether it claims to be digital finance, financial technology, Fintech or Techfin, the movement of concepts should not affect the determination of the nature of financial activities.

Whether ICO or STO, no matter how mysterious they are, they should identify the essence of their business activities through dazzling technical terms. Pan Gongsheng said that we should recognize that Internet finance and financial technology have not changed the financial risk attributes. On the one hand, because of its characteristics of cross-border, mixed and cross-regional operation, related risks spread faster, spread more widely and spillover effect is stronger; on the other hand, most of the customers receiving its services are long tail customers, with low risk identification ability and limited loss tolerance. More importantly, once there is a risk, its spatial scope and acceptance are more important. Compared with the traditional finance, the number of people has to turn several orders of magnitude, the potential social harm is more serious than before, and the difficulty of risk prevention and resolution is also greater.

Internet finance or financial technology should be subject to stricter regulation. Pan Gongsheng said that from the experience of the past few years, the practice of third-party payment, cash loans, virtual currency trading places and ICO clean-up and rectification, rapid identification, timely response and strict supervision, formats and fields have avoided the accumulation and spread of related risks, and this idea should also become risk prevention and control in the future. The main tone of dissolution. In addition, market participants should correctly understand the relationship between regulation and industry self-discipline. There is a strong negative correlation between the level of industry self-discipline and the weight of regulation. In essence, it reflects the balance between effectiveness and risk at the regulatory level. Once potential risks accumulate and expose excessively, it will force the regulatory authorities to reduce their tolerance to regulation. We should strengthen the rigidity of supervision and adopt stricter supervision concepts and measures. Source: First Financial Responsibility Editor: Wang Fengzhi_NT2541

Internet finance or financial technology should be subject to stricter regulation. Pan Gongsheng said that from the experience of the past few years, the practice of third-party payment, cash loans, virtual currency trading places and ICO clean-up and rectification, rapid identification, timely response and strict supervision, formats and fields have avoided the accumulation and spread of related risks, and this idea should also become risk prevention and control in the future. The main tone of dissolution.

In addition, market participants should correctly understand the relationship between regulation and industry self-discipline. There is a strong negative correlation between the level of industry self-discipline and the weight of regulation. In essence, it reflects the balance between effectiveness and risk at the regulatory level. Once potential risks accumulate and expose excessively, it will force the regulatory authorities to reduce their tolerance to regulation. We should strengthen the rigidity of supervision and adopt stricter supervision concepts and measures.