Global FinTech Guide
Country Name
ICO / token sale
Companies and projects have increasingly relied on the sale of digital assets, or tokens, as a means of fundraising. These tokens generally do not grant the holders an ownership interest in the issuing company or project, but may provide governance rights, access rights or other utility. This has been conducted through public sales known as initial coin offerings (ICOs), proliferation through token generation events (TGEs) or private sales, among other mechanisms.  While showing characteristics of traditional methods of fundraising, there are a range of unanswered questions related to the legal classifications of such products. As ICOs and TGEs will usually be distributed online and internationally, there is usually no single legal framework applying to such transaction, and the legal framework of each market in which the tokens may be offered or sold needs to be considered.


Attitude of the country towards ICOs/token sales

The issuance of token/bitcoins and the trading of bitcoin or other tokens is strictly prohibited in China. Please refer to section j. iii. for further information. 

Legal affairs

Presence of any explicit regulation on ICOs and the issuance of token/coins

The issuance of token/coins is prohibited in China. Please refer to section j. iii. for further information. 

Presence of any explicit restrictions on ICOs or the issuance, distribution and/or transfer of token/coins

Yes. On 4 September 2017, the Chinese government issued an announcement to prevent the risk relating to ICO and token-based financing (ICO Ban). The ICO Ban stipulates that any ICO and token-based financing shall immediately cease and that it is prohibited for all token trading platforms to exchange tokens with the legal currency or to trade tokens for other tokens (like tokens for bitcoin). A platform which violates the ICO Ban will be taken off from the App store. 

In 2018 and 2021, the governments and industry associations further issued several regulations and announcements to continue cracking down the usage of crypto currency, reiterating that the financial institutions and payment clearing institutions should not carry out businesses related to crypto currencies, and appealing to the public that they shall not participate in the speculative crypto currency transactions. 

In summary, after the issuance of ICO Ban, ICO, the issuance of token/bitcoins and the trading of bitcoin or other tokens is strictly prohibited in China.

Obligations and requirements to issue token/coins


Classification of token/coins in the jurisdiction

It is expressly described in the applicable laws and regulations that bitcoin is a virtual good and not a currency and therefore shall not be used and exchanged in the market as such. Furthermore, the financial institutions and payment service providers shall not price their goods and services based on bitcoin, sell or purchase bitcoin, take insurance businesses relating to bitcoin or make any other financial arrangement by using bitcoin. 

Presence of a duty to publish a prospectus bevor offering token/coins to investors

There is a risk to be deemed as being engaged in an illegal ponzi-scheme and administrative penalty and/or criminal punishment may be imposed. PBOC is entitled to clamp down such illegal ponzi-schemes. If the event is serious and triggers criminal liability, the person who is in charge of such ponzi-scheme will be imposed with the set term of imprisonment no less than 10 years and a fine with an amount more than RMB 50 thousand (equivalent to approximately USD7.9 thousand or EUR7.1 thousand) and less than RMB 500 thousand (equivalent to approximately USD79 thousand or EUR71 thousand).

Presence of AML/KYC requirements that are needed to be fulfilled regarding (i) the initial issuance of token/coins and (ii) any following transfer of token/coins to third parties

ICOs are prohibited, thus the AML/KYC is not applicable.

Additional comments regarding (i) the legal situation for ICOs/token/coins and (ii) any following transfer of token/coins to third parties

ICOs are prohibited, thus we understand that it is hard to develop business in this area in China legally.

Economic conditions

Market size for ICOs/token sales and existence of any previous regulated ICO/token sales in the jurisdiction


Additional comments regarding the economic situation for ICOs/token sales or what companies must be aware of in this business area

According to current laws and regulations, the services provided by an overseas virtual currency exchange to China’s residents via the Internet are also illegal financial activities. Therefore, FinTechs need to be cautious when providing cross-border trading services to Chinese consumers. 



© 2022, JunHe LLP. All rights reserved by JunHe LLP as author and the owner of the copyright in this chapter. JunHe LLP has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this guide.

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.


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