Regulators in Abu Dhabi are beginning to regulate the ICO. They are also warning investors about the risks associated with this type of financing. The ICO are a way for start-ups to raise funds by issuing a new crypto-currency. The principle is the same as crowdfunding, but with virtual currency.
This year, several start-ups have raised almost $ 2.4 billion through the ICO, reveals the site Coindschedule.com. Yesterday, the regulatory Authority of the financial services Abu Dhabi has proposed guidelines for the ICO, and the crypto-currencies.
The ICO is considered as a title
According to the FSRA, the ICO has the characteristics of a title. A company may therefore issue new securities to investors. Christopher Kiew-Smith, head of strategy Fintech for the FSRA has declared that the market of the ICO is very diverse. He added that the information are not accurate and that there are no financial statements. They, therefore, present an extremely high risk.
This regulatory framework also mentioned that all companies wishing to use this type of funding should be addressed to the FSRA. They also must achieve a call for tenders.
The crypto-currencies are goods
The regulatory authority of the financial services of Abu Dhabi has also indicated that the virtual currency are still illegal. However, she considers them as a commodity. Therefore, they are not regulated.
The regulator wants to find the right balance in an industry that continues to grow. A neighbouring country of Dubai has recently warned investors about the ICO, and has confirmed that it will regulate not. China has completely prohibited the ICO. In Japan, the market of Bitcoin is entirely legal, although it has not yet ruled on the ICO. The Abu Dhabi authority was already close to the organization in japan in charge of regulation of Bitcoin for advice.
Source : CNBC