Talking Points

- ICOs – “There is a good chance of losing your whole stake”, according to the FCA

- ICO ‘White Papers’ may be unbalanced, incomplete or misleading.

The DailyFX Bitcoin Glossary is designed to provide traders with a reference for important terms and concepts essential for understanding the emerging cryptocurrency universe.

The UK Financial Conduct Authority (FCA) has released a very strongly-worded warning of the risks consumers face in the unregulated world of Initial Coin Offerings (ICOs). While stopping short of banning the practice of digital token sales, the FCA highlighted that ICOs are “very high-risk, speculative investments”.

“You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself (e.g. business plan, technology, people involved) and prepared to lose your entire stake.”

The FCA noted that most ICOs are unregulated and based overseas and are unlikely to have access to UK regulatory protection. Instead of issuing a regulatory prospectus, ICOs issue a ‘White Paper’ that may be unbalanced, incomplete or misleading. They added that ICOs are projects in a very early stage of development and that there is a good chance of losing your whole stake.

The FCA warning comes hot on the heels of news that Chinese authorities are looking to ban ICO sales and are inspecting 60 ICO platforms. In late July, the US Securities and Exchange Commission warned that offers and sales of ICOs were subject to the requirements of federal securities law.

Bitcoin, Ethereum and most of the digital currency market made very modest gains Tuesday after recent volatile swings. The market capitalization stands at just over $150 billion, still $25 billion lower than its record levels made at the beginning of September.

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Market Moves/Top 8 Capitalizations – September 12, 2017

Digital Coin Sales (ICOs): You Could Lose The Lot Warns UK Regulator

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--- Written by Nick Cawley, Analyst.

To contact Nick, email him at nicholas.cawley@ig.com

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