The Regulation of Initial Coin Offerings in China: Problems, Prognoses and Prospects

34 Pages Posted: 26 Sep 2018 Last revised: 31 Oct 2019

See all articles by Hui Deng

Hui Deng

Independent

(Robin) Hui Huang

Chinese University of Hong Kong - Faculty of Law; 华东政法大学(East China University of Political Sicence and Law); University of New South Wales - Faculty of Law

Qingran Wu

Independent

Date Written: September 7, 2018

Abstract

As a new form of the FinTech industry, initial coin offerings (ICOs) underwent a period of explosive growth in China since the second half of 2016 and were banned in September 2017. However, the outright ban on ICOs may hamper revolutionary technological developments and dampen the growth of this potentially beneficial market. In quest of a solution to meet the regulatory challenges rather than completely stifling the innovation, a comparative analysis has been conducted in some advanced economies, including the US, Canada, Australia, Singapore, Hong Kong, the UK and the EU in order to propose a regulatory framework for ICOs in China. After a thorough analysis of relevant experiences and regulatory measures in overseas jurisdictions, this paper provides a non-exhaustive classification of the legal status of ICOs, namely pre-sale of products or services, offering of shares, issue of debentures, issue of derivatives, collective investment schemes and crowdfunding, as well as a possible regulatory reform of the current ICO ban in China. It is then concluded that except for ICOs that can be regarded as pre-sale of products or services, the other five types of ICOs are highly likely to be considered as financial securities and thus should be subject to securities laws.

Keywords: Initial Coin Offering, Cryptocurrency, Blockchain, FinTech, China

JEL Classification: K22

Suggested Citation

DENG, Hui and Huang, (Robin) Hui and Wu, Qingran, The Regulation of Initial Coin Offerings in China: Problems, Prognoses and Prospects (September 7, 2018). (2018) 19(3) European Business Organization Law Review 465-502 , Available at SSRN: https://ssrn.com/abstract=3245875

Hui DENG

Independent ( email )

(Robin) Hui Huang (Contact Author)

Chinese University of Hong Kong - Faculty of Law ( email )

Shatin, New Territories
Hong Kong
852-39431805 (Phone)
852-29942505 (Fax)

HOME PAGE: http://www.law.cuhk.edu.hk/app/people/prof-robin-huang/

华东政法大学(East China University of Political Sicence and Law) ( email )

1575 Wanhangdu Rd.
Changning, Shanghai 200042
China

University of New South Wales - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia
61-2-9385 9649 (Phone)
61-2-9385 1175 (Fax)

Qingran Wu

Independent ( email )

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