UAE regulator warns cryptocurrency investors, issuers
The Securities and Commodities Authority warned that crypto investments were not covered by the law
The UAE's Securities and Commodities Authority (SCA) on Sunday warned investors about digital token-based fundraising activities amid wider concerns of market volatility.
The SCA said in the circular that initial coin offerings (ICOs), initial token offerings, token presales or token crowdsales were "highly speculative and highly volatile regarding prices", according to state news agency WAM.
Investors were also urged to be aware of the risks associated with ICOs – an unregulated means through which start-ups are raising money for crypto-currency ventures.
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"It [the SCA] reiterated that it does not recognise, regulate, or supervise any ICO presently and that ICO investments are not offered legal or regulatory protection. It went on to say that investors involved in ICO investments are doing so at their own risk," according to the statement.
The SCA called upon digital token issuers, intermediaries advising on or facilitating digital token offerings and digital token trading platforms to seek legal and regulatory advice to ensure compliance with all the applicable laws and regulations.
The organisation's warnings came after the price of the world's most popular digital currency bitcoin fell from a record high of $19,511 on December 18 to a brief low of $7,614 on Friday before recovering losses.
The tumble took place amid a series of negative headlines including from American banks JPMorgan Chase, Bank of America and Citigroup, which said over the weekend they were halting the use of their credit cards to purchase bitcoin and other cryptocurrencies.
On February 2, Japanese regulators also raided the offices of Tokyo-based cryptocurrency exchange Coincheck after hackers stole $350m of the virtual currency NEM.
The theft affected roughly 260,000 customers and Coincheck said it would reimburse them with Japanese yen.
Japan's Financial Services Agency (FSA) is investigating the company's finances and security measures, while also trying to determine how the hack took place.
The UAE's SCA said it recently formed a fintech theme to help keep track of the latest developments.
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