According to a news report from CNBC, citing Abu Dhabi’s Financial Services Regulatory Authority (FSRA), the regulator released guidelines for both ICOs and cryptocurrencies.
“The ICO market is incredibly diverse in terms of quality; there are some ICOs which constitute high risk,” Chris Kiew-Smith, head of FinTech Strategy at the FSRA, said in an interview with CNBC on Monday (Oct. 9). “The disclosures are not there; there are no financial statements — those are extremely high risk for those seeking returns. But we are aware of and are working with some firms that want to use ICO tech to fund in a transparent fashion. We have asked firms to bring them within the regulatory framework.”
Under the Financial Services Regulatory Authority’s new cryptocurrency guidelines, companies that want to launch an ICO have to first check with the organization to see if it will fall under the watchdog’s regulation. Companies will also be required to publish a prospectus similar to those looking to sell stock via an initial public offering (IPO). Any middlemen looking to deal in ICOs need to have the approval of FSRA, noted the report.
However, there are areas in the Abu Dhabi bitcoin market that will remain unregulated, such as when a token is issued as part of the ICO, reported CNBC. In those cases, FSRA cautioned that investors should be extremely cautious before investing any money.
“The risk of fraud and loss of capital is therefore significantly higher. This is particularly likely to be the case where a token issuer promises extremely high investment returns that are disproportionately high relative to those generally available in the market,” the FSRA’s guidelines state, reported CNBC.
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What’s more, the FSRA said in the guidelines that virtual currencies like bitcoin are not legal tender and are rather viewed as commodities, like precious metals or fuels, and therefore will stay unregulated.
