China -- Securities Classification Regulatory Overview

China does not have a specific legal test equivalent to the Howey test for classifying cryptocurrency tokens as securities; instead, it imposes a comprehensive ban on cryptocurrency trading, ICOs, and related activities, treating most token issuances as illegal public financing without distinguishing tokens via a formal securities framework.[1][5]

Classification of Tokens

• Cryptocurrencies like Bitcoin and Ethereum tokens are classified as virtual commodities (not currencies or legal tender), per guidance from the 2017 Announcement and a 2020 Beijing Arbitration Commission report.[1]
• ICOs involving "so-called virtual currencies" through irregular token sales are deemed illegal public financing, potentially involving crimes like illegal issuance of securities, illegal fundraising, financial fraud, or pyramid schemes—without a case-by-case test.[1][5]
• No explicit delineation exists between security tokens, utility tokens, or others in mainland China law; all token issuance and trading platforms are prohibited.[1][3][5]

Registration and Exemption Requirements for Token Issuers

• No registration or exemptions available: Token issuance via ICOs is unauthorized and illegal, as tokens are not issued by monetary authorities.[1][5]
• The 2017 Announcement by seven agencies (People’s Bank of China, etc.) explicitly bans ICO financing as unapproved public financing.[1]

Secondary Trading Rules

• Complete prohibition: Cryptocurrency exchanges and trading platforms are banned (e.g., 173 platforms closed by 2018); secondary trading of tokens is illegal.[1][5]
• Financial institutions cannot handle, hold, or trade cryptocurrencies; a full ban on trading and mining took effect September 24, 2021.[5]

Enforcement Examples

• 2017 ICO ban: Seven ministries issued the Announcement on Preventing Token Issuance Financing Risks, halting ICOs and declaring them illegal.[1]
• 2018 platform closures: 173 exchanges shut down.[5]
• 2021 total ban: Prohibited all crypto trading, mining, and related services; many mining operations ceased by early 2018.[5]

Key Legislation and Regulatory Guidance

• Announcement on Preventing Token Issuance Financing Risks (September 4, 2017): Primary document banning ICOs and token trading. Full text: https://www.pboc.gov.cn/goutongxin/201709/t20170908_987533.html (People’s Bank of China site; Chinese).[1]
• No dedicated securities classification guidance for crypto tokens exists in mainland China, as activities are outright prohibited rather than regulated.[1][5]
• Note: Search results focus on bans; Hong Kong (not mainland China) has separate SFC rules for security vs. non-security tokens.[2][3] Information may evolve, but as of available data, no Howey-like test or token-specific securities regime applies in China.