The respective financial regulators for Sweden and New Zealand have recently issued statements addressing initial coin offerings (ICOs).
Sweden’s Financial Supervisory Authority [FSA] Has Issued a Statement Warning of the Risks Associated With ICOs
Sweden’s financial regulator has issued a statement outlining a number of risks pertaining to ICOs. The document describes “ICO” as a “term used as the designation for launching a new token or other form of digital access based on… crypto.”
The FSA compares initial coins offerings to “grassroots” financing activities, stating “the purpose of an ICO is to raise funding from the public to develop a business idea for a completed business, not different from grassroots financing.” The FSA’s document highlights five areas of principle concern:
“No Rights” – The FSA states that “most ICOs are unregulated,” and as such are “not under the supervision of… authorities. As a consequence resulting lack of “consumer protections,” the FSA warns that there is “ no guarantee that the token or cryptocurrency launched really gives the proprietor any kind of right or claim against the publisher.”
“No Market Valuation” – The FSA states that “there is usually no requirement that the price… [of] a new digital asset is matched by a true market value,” and that the issuer “has no obligation to allow any independent party to evaluate the digital asset.”
“No Guaranteed Access to Secondary Market” – The FSA warns that there is “no requirement that… someone… will buy back the digital asset” once it is distributed.
“No Information Requirements” – The FSA emphasized the lack “requirement for anyone launching an ICO to provide all essential Read More Here