UK finance watchdog warns of ‘very high risks’ on ICOs
The FCA states that people should only invest if they are prepared to lose their entire stake.
Britain’s Financial Conduct Authority (FCA) has issued a formal warning to UK citizens on initial coin offerings (ICOs).
The FCA highlighted that ICOs constitute a “very high-risk, speculative investment”, and because they are unregulated, it might be impossible to offer protection or guidance.
Investors are being urged to report scams or any risky activity to the FCA, and the body advised Brits to “learn more about potential benefits and challenges of the underlying technology that facilitates ICOs”.
The FCA also provides a link on its website for users to read through research on distributed ledger technology (DLT).
ICOs have sky-rocketed this year, with more than US$1.5 billion being raised through ICOs so far in 2017, according to Business Insider.
“You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself (e.g. business plan, technology, people involved) and prepared to lose your entire stake,” the FCA states.
The FCA is also looking at ways of introducing new legislation to monitor the industry. In the meanwhile, people are urged to “carefully consider if their activities could mean they are arranging, dealing or advising on regulated financial investments.”
The FCA is not the first regulatory body to monitor ICOs, organisations in the US, China, Canada and Hong Kong are also cracking down on ICO activity. Last week, China announced that it will ban ICOs which has sent cryptocurrencies plummeting globally.
Check out our guide to cryptocurrencies.
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