LONDON: Britain’s markets watchdog will step up its scrutiny
of the initial coin offering (ICO) market to see if new rules are
needed to protect investors after issuing an alert in September.
Start-ups
have begun issuing new digital currencies via ICOs and the market has
raised about 3.7 billion pounds ($4.93bn) this year according to an
industry estimate.
The Financial Conduct Authority (FCA)
said it would gather further evidence on the market and conduct a deeper
examination of what it called fast-paced developments.
“Our
findings will help to determine whether or not there is need for
further regulatory action in this area,” the FCA said in a statement on
Friday.
Paul Lewis, a lawyer at Linklaters, said the
legal and regulatory treatment of ICOs were often complex and unclear
due to many jurisdictions being involved.
He said the
FCA’s had sent “a signal that regulators are seeking to bring greater
control to the ICO market, but it is far too early in the development of
this market to predict what the settled or common regulatory approach
will be.” The watchdog said it had noticed steady growth in the volume
of contracts for differences (CFDs) trades linked to digital currencies.
CFDs allow investors to gain indirect exposure to price movements in an
underlying asset like digital currencies.
“This trend raises significant concerns about potential harm to retail consumers,” the FCA said.
The watchdog issued an alert on the products last month.
Jake
Green, financial regulatory partner at law firm Ashurst, said the CFD
industry was awaiting new European Union laws in January which give EU
regulators powers to ban products.
