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). In a report published in July, the FCA said that ICOs were "likely to be subject to regulation and supervision by UK financial regulators". 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.