The list of countries not issuing warnings about ICOs is growing smaller every week. Germany is one of the latest regions to do exactly that. It is evident the securities regulator in this region is very concerned over initial coin offerings. There is no official ban to speak of just yet, but that situation may change over time. All of this continues to show there is a very difficult time ahead for ICOs moving forward. More scrutiny means harsher regulation along the line.
Up until this point, Germany has been relatively quiet when it comes to cryptocurrency. Although LocalBitcoins isn’t operating in the country any longer, that is the only noteworthy development to date. That has come to change with this recent warning being issued by the financial regulator. These highly speculative investments are a big problem, to say the very least. Addressing this situation will be anything but easy right now.
ICOs are Under Fire In Germany
This does not mean there will be a ban on ICOs in Germany, mind you. For now, this is a mere warning designed to keep investors safe. We have seen very few ICOs perform above expectations so far. Most of the tokens issued lose a lot of value pretty quickly. This is mainly due to very few projects having any working technology, to begin with. It takes time to create proper projects, which is understandable.At the same time, this only creates even more risks to be concerned about.
“Due to the lack of legal requirements and transparency rules, the consumer is left on their own when it comes to verifying the identity, reputability and credit standing of the token provider and understanding and assessing the investment on offer,” read an excerpt from BaFin’s notice to investors. “It can also not be guaranteed that personal data will be protected in accordance with German standards.”
This new form of raising money has gotten a lot of attention lately. Dozens of new projects run an ICO every single week.It is evident this cannot go on without any form of oversight. After all, it is quickly becoming one of the biggest crowdfunding industries to date. However, there are no repercussions for companies not delivering on their initial promise. The lack of legal requirements and transparency will eventually be the undoing of this industry, that much is evident.
Header image courtesy of Shutterstock
