UK’s Financial Conduct Authority Stated That It Is “Keeping a Close Eye on” the ICO Industry

UK’s Financial Conduct Authority Stated That It Is “Keeping a Close Eye on” the ICO Industry

The United Kingdom and Malaysian authorities have issued statements seeking to highlight risks associated with initial coin offerings, and discourage the distribution of unlicensed securities through ICOs. The statement largely advance the positions recently put forward by the United States, Hong Kong, Canadian, and Singaporean financial regulators.

This week, the UK’s Financial Conduct Authority (FCA) stated that it is “keeping a close eye on Initial Coin Offerings”, before describing the parallels between Initial Public Offerings (IPOs) and ICOs. The FCA concluded that many initial coin offerings are likely to fall under the FCA’s regulator jurisdiction, due to the similarities between IPOs and ICOs, and the prevalence of token sales issuing securities to investors.

Speaking with the Financial Times, an FCA spokesman stated that “initial coin offerings have various parallels with Initial Public Offerings, private placement of securities, or crowd sales. Depending on how they are structured, they may, therefore, fall into the regulatory perimeter.” The statements have largely been interpreted as a warning to the ICO industry, and an outline of what legal considerations should be made by entrepreneurs seeking to launch initial coin offerings.

The Securities Commission Malaysia (SC) also issued an official statement seeking to the potential risks associated with investing in an ICO. The concerns highlighted include the difficulty of “verify[ing] the authenticity of” an ICO, challenges regarding “the recovery of invested monies [that] may be subject to foreign laws or regulations” in the event that ICOs are based outside of Malaysia, the potential for “digital tokens traded on a secondary market” to “give rise to risks of insufficient liquidity or volatile and opaque pricing”, and the absence of regulation and “legal protection… for investors”. The SC also articulated concerns pertaining to money laundering and terrorist financing risks.

Source: https://news.bitcoin.com/ico-regulatory-round-up-uk-malaysia-and-switzerlands-crypto-valley-point-to-risks/?utm_source=OneSignal%20Push&utm_medium=notification&utm_campaign=Push%20Notifications