ICO Warning Issued By UAE’s Securities and Commodities Authoritybr>
UAE’s Securities and Commodities Authority (SCA) has issued a warning to residents on the risk of initial coin offerings (ICO).
The SCA explained that ICO trading on the secondary market is risky, owing to the high volatility and sudden fluctuations in the crypto market. ICOs are also highly speculative and unregulated, which means they are subject to fraud risks. The SCA claims many investors (particularly retail) may be unaware.
The regulator added that ICO information made available to investors may be unaudited or incomplete and may present a given investment case in an unbalanced and misleading manner. In addition, the regulator warns that investing in overseas ICO projects may also prove to be risky, depending on whether or not the market is formally regulated.
The SCA has called upon digital token issuers, intermediaries advising on or facilitating digital token offerings, and trading platforms to seek legal and regulatory advice to ensure compliance with applicable laws and regulations.
In October 2017, the Central Bank of the UAE warned the public against using cryptocurrencies such as bitcoin, calling it unofficial and lacking sufficient supervision. At the time, UAE Central Bank Governor Mubarak Rashed Al Mansouri said that cryptocurrencies were under review and that the central bank was “developing necessary regulatory frameworks for businesses and exchanges to comply with.”