UK Regulators Take A Closer Look At ICOs

Britain's markets watchdog will measure its scrutiny of the initial coin offering (ICO) marketplace to find out if new rules are needed to shield investors after issuing an alert in September.

Start-ups have begun issuing new electronic monies via ICOs and the marketplace has raised about 3.7 billion pounds ($4.93 billion) this year according to an industry quote.

The Financial Conduct Authority (FCA) said it would collect additional evidence on the market and run a deeper examination of what it called fast-paced developments.

Paul Lewis, a lawyer at Linklaters, said the legal and regulatory treatment of ICOs were frequently intricate and uncertain due to a lot of authorities being involved.

He said the FCA's had sent “a signal that regulators are trying to bring greater control to the ICO market, but it's far too early in the development of the market to forecast what the settled or common regulatory strategy will be.”

The watchdog said it had detected steady increase in the quantity of contracts for differences (CFDs) trades linked to electronic currencies.

“This trend raises significant concerns about potential harm to retail consumers,” that the FCA said.

The watchdog issued an alert on the goods last month.

Jake Green, financial regulatory partner at law firm Ashurst, stated the CFD industry was anticipating new European Union laws in January that give EU regulators forces to prohibit products.

“I think it is currently a matter of ‘when' and not ‘if' that we'll observe the European Securities and Markets Authority (ESMA) exercise power in relation to limit certain forms of offerings — digital monies maybe where they start,” Green said.

ESMA said on Friday it is considering measures to prohibit the marketing, sale or distribution of binary options to retail customers and limit the advertising, distribution or sale to retail clients of CFDs, such as rolling spot foreign exchange.

The FCA, in another statement, said it encouraged ESMA in its consideration of potential EU-wide product intervention.

FCA Chief Executive Andrew Bailey informed the BBC on Thursday that investors in electronic currencies such as bitcoin should be prepared to lose all their money.

The FCA also published comments to its public consultation on blockchain, or dispersed ledger technologies (DLT), the shared electronic database structure that underpins digital currencies such as bitcoin.

“Based on the comments and its own work, general the FCA is available to all kinds of installation of DLT … provided the operational risks are properly identified and mitigated,” the watchdog said.

No new regulatory requirements were required for blockchain at this phase, the FCA stated.

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