in

New Zealand and Sweden react to initial coin offerings / ICOs

The financial regulators from Sweden and New Zealand have recently issued statements addressing initial coin offerings (ICOs).

Sweden’s financial regulator has issued a statement outlining a number of risks pertaining to ICOs. The document describes “ICO” as a “term used as the designation for launching a new token or other form of digital access based on… crypto.”

The FSA compares initial coins offerings to “grassroots” financing activities, stating “the purpose of an ICO is to raise funding from the public to develop a business idea for a completed business, not different from grassroots financing.” The FSA’s document highlights five areas of principle concern:

“No Rights” – The FSA states that “most ICOs are unregulated,” and as such are “not under the supervision of… authorities. As a consequence resulting lack of “consumer protections,” the FSA warns that there is “ no guarantee that the token or cryptocurrency launched really gives the proprietor any kind of right or claim against the publisher.”

“Risk of Investment Fraud” – The FSA warns that “the recent rapid increase in both the number of ICOs and their value can attract developers who have no interest in completing any project but are just looking for money.”

New Zealand’s Financial Markets Authority recently issued a statement that seeks to encourage entities within the ICO and cryptocurrency industries to consult with the regulatory body regarding their legal obligations.

The FMA “strongly encourages any businesses considering making an offer through an ICO to approach us early during their development phase.” The regulator asserts that the “specific characteristics and economic substance of an ICO determine if it’s a financial product – if it is regulated, and if so how.”

The FMA also has released guides for individuals and businesses seeking to offer “services such as cryptocurrency exchanges, wallets and brokering.” Such providers must “be a member of a dispute resolution scheme, be on the Financial Services Providers Register, must comply with fair dealing provisions in the Financial Markets.

Given the increasing number of ICOs, it is very clear that in the coming period more and more countries will draw attention to the risks that investors face.

0 points

Upvote Downvote

Total votes: 0

Upvotes: 0

Upvotes percentage: 0.000000%

Downvotes: 0

Downvotes percentage: 0.000000%

Get the best crypto news straight into your inbox!

Written by Brad Chillum

Israeli regulator says that cryptocurrency may be the next big scam

How I made $350,000 in one year riding the Crypto-wave: Cryptocurrency Trading like a Pro