The Internet Finance Association: Tips on preventing risks in overseas ICO and "virtual currency" transactions

Today, the China Internet Finance Association issued an announcement on "Tips on Preventing Risks of Overseas ICO and "Virtual Currency" Transactions", the content of which is as follows:

On September 4, 2017, the People's Bank of China and seven other ministries and commissions jointly issued the "Announcement on Preventing Risks of Token Issuance and Financing", which clearly stated that from the date of the announcement, all types of token issuance and financing activities should be stopped immediately; financial institutions and non-bank payment institutions shall not carry out businesses related to token issuance and financing transactions; for token financing trading platforms that have illegal and irregular problems, the financial management department will request the telecommunications regulatory department to close its website platform and mobile APP in accordance with the law, request the Internet Information Office to remove the mobile APP from the application store, and request the industrial and commercial management department to revoke its business license in accordance with the law.

At present, the relevant management departments have basically completed the cleanup and rectification of domestic ICO activities and "virtual currency" trading venues. During this period, some investors have turned to overseas to carry out related activities. According to relevant national management policies, domestic investors' network access channels, payment channels, etc. may be affected, and investors will suffer losses. At the same time, it is necessary to point out to investors that due to the general lack of regulations internationally, overseas trading platforms also have risks such as system security, market manipulation and money laundering.

Recently, as governments around the world have paid attention to strengthening supervision in the field of "virtual currency", some overseas trading platforms may be forcibly banned by their governments, and some overseas trading platforms have been restricted from access due to obvious compliance risks. In this context, domestic investors will face certain risks when turning to overseas platforms to participate in transactions. At the same time, the association has found that some institutions or individuals in the country are still organizing so-called currency-to-currency transactions and over-the-counter transactions, and are equipped with services such as market makers and guarantors. This is actually still a "virtual currency" trading venue, which is obviously inconsistent with current policy regulations. In these related transactions, some domestic social platforms provide various conveniences for centralized transactions of "virtual currency", and some non-bank payment institutions provide payment services for "virtual currency" transactions. Investors should be aware that the above-mentioned services for "virtual currency" transactions are all subject to policy risks. Investors should actively strengthen their risk awareness, remain rational, and stay away from all kinds of illegal financial activities.

The China Internet Finance Association solemnly calls on investors to recognize the risks of overseas ICOs and "virtual currency" trading platforms and firmly establish risk prevention awareness. Members of the China Internet Finance Association should abide by the industry's self-discipline commitments, actively resist illegal and irregular financial activities, and not participate in or organize any activities involving ICOs and "virtual currency" transactions.