Netherlands Authority for Financial Markets (AFM) has issued a warning against ICO. The regulator has warned investors about the risks of new cryptocurrencies especially the ones that issue Initial Coin Offering (ICO).
According to the regulator, investors should be careful about the promises of high returns from ICO as well as the possibility of price manipulation in the token markets. Merel Van Vroonhoven, the Chairperson of AFM, said there was great potential in Blockchain technology. He, however, cautioned that there was a great risk of scams and losses on investments in ICO.
In his statement: “Although AFM sees great possibility in blockchain technology and financial services it also sees high risks in ICOs in the current hype. The combination of possible risks of scams and loss of intake is a very dangerous combination.”
According to the Netherlands Authority for Financial Markets there should be more cooperation among regulators in Europe. “We have also cautioned the other regulators across Europe. This is because ICOs are international and reach to people across different countries. That’s why we need to cooperate with other European regulators.” Van Vroonhoven added.
With all this, a Netherlands News Report has claimed that AFM has no power to regulate ICOs.
What Other Countries have done about ICO
Because of the increasing concerns around ICOs, several financial regulators have taken action.Countries like the United States, Canada, and Singapore have already warned against the Blockchain funding method. Other markets like SouthKorea and China have already ordered for ICO ban.
As if that is not enough a Major European union Regulator which is the European Securities and Markets Authority has already issued warnings about ICOs. Whether ICOs survive or are banned in most of the nations, they remain very risky. Many blockchain providers, however, prefer them because they are the easiest method to raise capital for startups.