Published on November 13th, 2017 | by bitcoin0
ICO Risk Warning Issued by European Financial Regulator
The European Securities and Markets Authority (ESMA) today issued two separate statements that outline what it perceives as the risks initial coin offerings (ICOs) pose for investors and startups, respectively.
Striking a concerned tone on the nascent state of the market, ESMA warned investors that the use of custom cryptocurrencies for fundraising comes with a “high risk” of capital loss.
Adding to that, the authority alerted that ICOs may fall outside of EU laws and regulations, which in turn does not benefit investors.
According to a press release, the ESMA stated:
“ICOs are also vulnerable to the risk of fraud or money laundering.”
The news notably follows other recent ICO warnings including the Japanese FSA’s statement to investors on ICO risks, and another from Germany’s Federal Financial Supervisory Authority, which said: “Investors should be wary of the ‘numerous risks’ involved in token sales.”