The City watchdog is probing the market for initial coin offerings (ICOs), an in-vogue crowdfunding mechanism that involves projects raising cash in cryptocurrencies such as Bitcoin. The Financial Conduct Authority (FCA) said it planned to “conduct a deeper examination of the fast-paced developments” in ICOs and would assess if it needs to take “further regulatory action”. ICOs involve companies issuing “tokens”, an asset similar to a cryptocurrency that is linked to the company’s success, in exchange for a digital currency like Bitcoin or Ethereum. They have become fashionable in recent months as start-ups seek to raise funds from newly-wealthy cryptocurrency investors, but have also attracted regulatory scrutiny amid a wave of cyber attacks and scams. China has banned the schemes and America’s Securities and Exchange Commission shut down one ICO this week after it failed to register as a sale of securities.
The UK's Financial Conduct Authority (FCA) is considering whether it needs to take regulatory action on initial coin offerings (ICOs). The FCA is examining the market for ICOs, which have become increasingly popular as start-ups attempt to raise funds from cryptocurrency investors. ICOs have faced increased regulatory scrutiny globally after a series of scams and cyber attacks, with China already having banned them. The FCA earlier warned that ICOs are "high-risk" investments, the majority of which are unregulated. The review is being undertaken as part of research into distributed ledger technology.