14 Nov International Authorities’ viewpoint on the ICO hype
The Dutch Authority for the Financial Markets (AFM) has released an official warning conveying the dangers of Initial Coin Offerings (ICOs). With this statement, the financial markets supervisor follows in the footsteps of other national and international authoritative supervisors.
In the press release (in Dutch), the AFM warns for the ICO hype, stating that it can potentially blind investors for the risks related to the digital coin offerings. The statement concerning ICOs was preceded by a similar statement released by the AFM a few months ago, concerning the risks of investing into cryptocurrencies. Taking current ICO developments into account, the AFM generally advises consumers to not invest in ICOs.
ICOs are often structured in a way that excludes them from traditional financial supervision. Therefore, investors can’t rely on protection from regulation or securities supervisors. Despite seeing a lot of possibilities for blockchain, the AFM wants to stress the risks of scamming and loss of investment.
The European Securities and Markets Authority (ESMA) also released two statements regarding ICOs, earlier today. One statement is addressed to the risks of ICOs for investors, and the other statement contains rules directed at firms involved in ICOs. Earlier this week, the Chair of the SEC, Jay Clayton, addressed his concerns too, regarding ICOs. The Chair stated that he hasn’t seen an ICO without a sufficient number of hallmarks of a security yet. In addition to this, Germany’s financial regulator, the Federal Financial Supervisory Authority (BaFin), warned consumers for substantial risks related to the purchase of cryptocurrency coins or tokens, last Friday. The Chair of Israel Securities Authority (ISA), Professor Shmuel Hauser, takes a more lenient approach towards ICO, stating to look at the ICO industry on a case by case basis.
At the far end of the spectrum, Gibraltar takes a different stance in the situation. The self-governing British overseas territory is already running its own blockchain exchange, the Gibraltar Blockchain Exchange (GBX). On top of this, Gibraltar also is running an ICO to fund the ‘Rock Token’, creating the world’s first nationally regulated and fully licensed assets exchange and marketplace for cryptocurrency assets. The GBX will only accept quality offerings which have been subject to a thorough vetting process and thus hopes to create a new standard of excellence in listings.