FCA issues total loss warning on Bitcoin boom

Malaysia Warns Investors of ICO Risks

Malaysia Warns Investors of ICO Risks

The Securities Commission of Malaysia (SC), the regulatory authority that oversees and enforces financial regulation in the country, has issued a warning on the potential risk of initial coin offerings (ICO).

Some of the risks highlighted by the FCA included the lack of regulation and protection for investors, the high price volatility associated with digital tokens and the potential for fraud.

Last week, the People's Bank of China banned blockchain startups raising funds via ICOs.

Initial Coin Offerings (ICO) raise money for a specific project or company through the issue of a physical coin in exchange for a cryptocurrency, such as Bitcoin or Ether. The majority of ICOs are based on the Ethereum network.

ICOs are being used in most cases as digital fundraising tools, allowing investors to exchange cryptocurrencies like Bitcoin for proprietary coins or tokens linked to a specific firm or project.

The FCA is now looking at whether to introduce new regulation to cover the space and stopped short of doing so on Tuesday.

The UK's markets regulator has added its voice to warning calls from across the world around the dangers of ICO investing.

The FCA urged businesses involved in ICOs to carefully assess if their activities could fall under the scope of dealing with regulated financial investments and related laws. "Comments such as "many ICOs will fall outside the regulated space" and "you are extremely unlikely to have access to United Kingdom regulatory protections like the Financial Services Compensation Scheme or the Financial Ombudsman Service" are not firm affirmations that investors will not have recourse to regulatory protection".

"In addition, digital currency exchanges that facilitate the exchange of certain tokens should consider if they need to be authorized by the FCA to be able to deliver their services".

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