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European Watchdog Warns On Cryptocurrency ICOs

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The European Securities and Markets Authority or ESMA alerted investors about the high risk investment in Initial Coin Offering or ICO.

The statement from the regulator said the price of the coin or taken is extremely volatile and investors might not be able to reddeem them for a prolonged period. Further, the ICO may not fall under the scope of the European Union laws and regulations and there is a risk of not benefiting the protection. The risk of fraud or money laundering also need to be considered, ESMA said.

The regulator that issued two statements on the highly speculative investment noted that firms involved in initial offering might be liable for breach on any failure to comply.

Highlighting the risks, ESMA said, "Many of the coins or tokens that are being issued have no intrinsic value other than the possibility to use them to access or use a service/product that is to be developed by the issuer. There is no guarantee that the services/products will be successfully developed and, even assuming that the project is successful, any eventual benefit may be extremely low relative to the
invested capital."

Lack of exit options, extreme price volatility, inadequate unaudited information, flaws in the technology, lack of access or control on the coins or tokens were the other risk factors highlighted by the regulator.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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