Initial Coin Offerings Draw U.K. Scrutiny Over $4 Billion Market
(Bloomberg) -- The U.K. Financial Conduct Authority fired a warning shot across the bow of the roughly $4 billion initial coin offering market, saying it will examine the industry to determine if more regulation is necessary.
Since highlighting risks to investors from ICOs in September, the watchdog said on Friday that it has seen the market evolve at “great speed” and has decided to start a broader review. Depending on how an ICO is structured, it may fall under the FCA’s oversight, the authority said.
“We intend to gather further evidence on market developments and to conduct a deeper examination of this fast-paced phenomenon,” the FCA said. “Our findings will help to determine whether or not there is need for regulatory action in this area.”
The statement follows a move to crack down on the market by the U.S. Securities and Exchange Commission, which on Dec. 11 announced an enforcement action against the California creator of a food-review app., Munchee Inc. The company halted its planned $15 million ICO after the SEC questioned whether the offering should have been registered as a security, the agency said.
“At present, there is little international convergence of regulation in relation to token offerings,” said Paul Lewis, partner at Linklaters law firm. “Today’s announcement from the FCA sends 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.”
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