Regulators in China, EU, UK move on cryptocurrencies

Within the last 48 hours regulators in China, the European Union and the UK have been reported to be planning or have announced fresh moves to regulate, warn about and otherwise control digital currencies, with particular focus on so-called initial coin offerings (ICOs). 

As reported here last week, the Chinese regulator, the People’s Bank of China, announced on 4 September that it would ban ICOs, which are newly-created cryptocurrencies offered by fledgling companies instead of shares in the business. The news immediately sent the value of bitcoin tumbling by as much as 11.4%, according to Bloomberg, as well as hitting other cryptocurrency prices.

Now, according to press reports – including Caixin, the Chinese financial news website – China’s authorities are considering shutting down the country’s bitcoin and digital currency exchanges.  Their concern is said to be the wild price fluctuations that have become characteristic of cryptocurrencies recently.

No official ban has yet been announced, however, the press reports note.

In the UK, meanwhile, the Financial Conduct Authority this morning issued a warning to consumers, via a press release that may also be viewed on its website, about “the risks of initial coin offerings”, noting that they “are very high-risk, speculative investments”, and “you should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself (eg business plan, technology, people involved), and prepared to lose your entire stake”.

The warning also urged anyone who suspected that a particular ICO was a scam to report it to the FCA via its online scam-reporting page.

European officials are also looking into the matter of ICOs, the Law360 news website  noted on Monday, in an article which quoted an unidentified European Commission executive as saying EU regulators were “studying risks posed by the growing phenomenon” of start-up companies offering newly-created digital currencies to investors instead of stock.

While most of the ICOs so far have not been launched in the EU or by EU entities, the official was quoted as saying, “platforms on which they are launched may be accessible to investment by EU investors”.

Law360 last week reported that the FCA was considering regulating the ICO market, again quoting an unidentified source.

“It is on our radar. It is a matter of concern,” Law360 quoted the FCA official as saying.

“We did go to industry once, but given the amount of attention ICOs are now receiving, we’re going to look at this again and will consider what regulation looks like.”

The total ICO sums raised this year alone has, Law360 noted, topped US $2bn, “with around 20 offerings a month now in the public domain”.

To read that article, click here. 

 

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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