Companies listing via ICO and providing services that are normally regulated will be specifically targeted.
The UK’s Financial Conduct Authority (FCA) has just warned investors against the speculative risks inherent with initial coin offerings (ICOs). The announcement comes less than a week after the regulator promised to maintain close scrutiny on ICOs, amidst industry growth in token-based fundraising activities.
The FCA said: "Businesses involved in an ICO should carefully consider if their activities could mean they are arranging, dealing or advising on regulated financial investments.
Each promoter needs to consider whether their activities amount to regulated activities under the relevant law. In addition, digital currency exchanges that facilitate the exchange of certain tokens should consider if they need to be authorised by the FCA to be able to deliver their services."
The announcement is noteworthy as it reflects a more concrete stance from one of the industry’s paramount regulatory authorities. Authorities in China and elsewhere have gone even further, banning ICOs outright in a bid to rein in token crowd sale efforts.
‘High risk’ ventures
Earlier this year, the FCA issued a discussion paper outlining its concerns over the risks posed by Cryptocurrencies on market integrity, consumer protection, competition and risk management measures. The regulator also noted that it may separately regulate some aspects of Blockchain technology that fall outside existing financial services rules.
While a relatively new funding mechanism, ICOs have become all the rage across the industry as businesses look to fund their respective ventures. Typically, ICO issuers accept popular cryptocurrencies such as Bitcoin or Ethereum in exchange for a proprietary ‘coin’ or ‘token’ that is dedicated to a specific firm or project.
Most common is a promise and pledge to acquire a small share of the firm conducting the ICO – in many cases this takes the form of a prepayment voucher for future services, or in some cases offers no discernible value at all. The FCA views this practice as highly speculative, carrying exorbitant levels of risk for investors.
Consequently, the regulator cautions investors against engaging in ICO or token sales given the aforementioned risks. It says that only experienced investors that are familiar with a given project should engage.
Most critically, the vast majority of ICOs are not regulated by the FCA or any other regulatory authority. This blind spot creates the potential for abuse and fraudulent activity given that these sales operate outside the influence of authorities. There is very limited investor protection in the UK relating to them, meaning that you are likely not entitled to protections under the Financial Services Compensation Scheme (FSCS).
The prospect of high price volatility is also problematic, and can result in the loss of your entire investment. Coupled with this is vulnerability for fraud. While ICO white papers outline the conditions of token sales, the probability of misleading or outright false statements remains extremely high and should not be relied upon via unregulated groups.
The UK’s Financial Conduct Authority (FCA) has just warned investors against the speculative risks inherent with initial coin offerings (ICOs). The announcement comes less than a week after the regulator promised to maintain close scrutiny on ICOs, amidst industry growth in token-based fundraising activities.
The FCA said: "Businesses involved in an ICO should carefully consider if their activities could mean they are arranging, dealing or advising on regulated financial investments.
Each promoter needs to consider whether their activities amount to regulated activities under the relevant law. In addition, digital currency exchanges that facilitate the exchange of certain tokens should consider if they need to be authorised by the FCA to be able to deliver their services."
The announcement is noteworthy as it reflects a more concrete stance from one of the industry’s paramount regulatory authorities. Authorities in China and elsewhere have gone even further, banning ICOs outright in a bid to rein in token crowd sale efforts.
‘High risk’ ventures
Earlier this year, the FCA issued a discussion paper outlining its concerns over the risks posed by Cryptocurrencies on market integrity, consumer protection, competition and risk management measures. The regulator also noted that it may separately regulate some aspects of Blockchain technology that fall outside existing financial services rules.
While a relatively new funding mechanism, ICOs have become all the rage across the industry as businesses look to fund their respective ventures. Typically, ICO issuers accept popular cryptocurrencies such as Bitcoin or Ethereum in exchange for a proprietary ‘coin’ or ‘token’ that is dedicated to a specific firm or project.
Most common is a promise and pledge to acquire a small share of the firm conducting the ICO – in many cases this takes the form of a prepayment voucher for future services, or in some cases offers no discernible value at all. The FCA views this practice as highly speculative, carrying exorbitant levels of risk for investors.
Consequently, the regulator cautions investors against engaging in ICO or token sales given the aforementioned risks. It says that only experienced investors that are familiar with a given project should engage.
Most critically, the vast majority of ICOs are not regulated by the FCA or any other regulatory authority. This blind spot creates the potential for abuse and fraudulent activity given that these sales operate outside the influence of authorities. There is very limited investor protection in the UK relating to them, meaning that you are likely not entitled to protections under the Financial Services Compensation Scheme (FSCS).
The prospect of high price volatility is also problematic, and can result in the loss of your entire investment. Coupled with this is vulnerability for fraud. While ICO white papers outline the conditions of token sales, the probability of misleading or outright false statements remains extremely high and should not be relied upon via unregulated groups.
Australia Gears Up for Bitcoin ETFs: ASX Leads the Charge
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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