Guernsey regulator raises concern about ICO risks

TL;DR Breakdown:

• Guernsey regulator has issued a warning to residents about investing in ICOs.
• The regulator mentioned that most ICO tokens are unregulated and can expose investors to many risks.

The financial regulator of Guernsey has raised concern about the potential risks involved with digital currencies issued through initial coin offering or ICO. Among other things, the Guernsey regulator mentioned the “lack of investors’ protection” as possible risk residents would face when participating in such coin offerings. Investors that choose to participate in ICOs will do so at their own risk, per the warning.

Cryptos are risky, warns Guernsey regulator

Guernsey is an independent and self-governing island in the English Channel off the coast of Normandy. The warning today by the Guernsey Financial Services Commission (GFSC) is coming as cryptocurrencies and ICOs are gaining popularity and are widely discussed by regulators across several countries. The Guernsey regulator emphasized that digital currencies from ICOs “are very high-risk speculative investments,” as most of them are not regulated.

Due to lack of regulation, many people who invest in ICOs projects are exposed to certain risks, which include the lack of protection as an investor, the Guernsey regulator warned. The GFSC also warned that these digital currencies are also volatile in value and might have the potential for fraud. Hence, the Guernsey regulator warned against investing in such projects or coins, especially by retail investors.

Regulators don’t fancy ICOs 

ICOs lately became the preferred method for many companies to raise funds from the public. A digital currency is issued in return to the investors, which represents a share in the company conducting the offering. This method was in place previously and had effectively raised more than $4 billion for many companies. However, global regulators came after the method as several fraudsters took advantage of it to defraud unsuspecting investors.