LONDON — Britain’s markets watchdog has become the latest regulator to crack down on the booming “initial coin offering” sector, warning investors on Tuesday that “ICOs are very high-risk, speculative investments.”
2017 has seen a boom in ICOs, where early stage startups issue new digital currencies in exchange for real money that can be used to fund projects. Over $1.5 billion has been raised through ICOs so far this year.
However, the largely unregulated and unproven fundraising method has provoked fears that many investors may not know what they are getting themselves into. There are also fears that scammers may be attracted to the fundraising method, with some projects raising millions on little more than a white paper outlining their ideas.
The Financial Conduct Authority (FCA) said in a statement on Tuesday: “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 regulator warned that the coins issued in ICOs are subject to extreme volatility, often carry little or no investor protection, and are high-risk given the unregulated nature of the space and early stage of …read more
Source:: Businessinsider – Finance