Financial Conduct Authority brands Initial Coin Offerings "very high risk"

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"ICOs are very high-risk, speculative investment", the Financial Conduct Authority (FCA) - which oversees 56,000 financial services firms and markets in the United Kingdom - said in a statement published today.

The source of these details is Hu Bing, a researcher at the Chinese government-supported Institute of Finance and Banking.

The FCA said the digital token may represent a share in a firm, a prepayment voucher for future services or it may have no discernible value at all.

"The UK's top financial watchdog urged investors to 'fully research" the project offering ICOs and recommends only experienced investors to invest and buy digital tokens from an ICO project. Similar warnings have already been published by authorities in the US, Canada and Singapore, while last week China even banned all ICOs in the country starting September 4.

In its latest statement, the FCA restated that the regulation of ICOs in the United Kingdom "can only be decided case by case". "Some tokens may also constitute transferable securities and therefore may fall within the prospectus regime".

"Each promoter needs to consider whether their activities amount to regulated activities under the relevant law", it said. "In addition, digital currency exchanges that facilitate the exchange of certain tokens should consider if they need to be authorised by the FCA to be able to deliver their services", it said. Over $1.5 billion has been raised through ICOs so far this year. Most of them, warn about the high volatility of cryptocurrencies, the lack of regulation in the field and that there is mostly no protection for investors. The list of active, upcoming and recent ICOs on the website "ICO alert" covers 31 pages of A4 paper and includes around 600 companies.

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