Financial Regulator of United Arab Emirates warns of the risks of new cryptocurrencies, called Initial Coin Offerings (ICOs). In a circular, the authority refers to the risks of fundraising sales, such as ICO or token presales. Although this is the critical tone in the country louder – economic policy interventions and regulations, despite all the criticism of the Gulf are still waiting.
Authority sees risks as primarily based on the fact that people willing to invest may not be clear what they are spending their money on. ICOs would often be completely unregulated and therefore there is a risk of fraud.
Large price fluctuations are expected as soon as the respective currencies are available on secondary and mass markets. However, this is in the nature of things. For so-called ICO Presales is usually sold initially at much lower prices than the mass sales. Often the Presale serves as launch pad and foundation for further infrastructure before the jump into the mass business.
Investments in foreign ICOs in particular are presented as a problem in the newsletter, as investors would also lack clarity about the specific regulatory conditions. In this context, the Financial Regulator stresses that it would not regulate or monitor ICOs in return.
“ICOs can be issued by foreign sources and are therefore subject to laws and regulations that are difficult to verify. Tracing and reimbursement in the event of an ICO collapse could prove extremely difficult. “
The SCA wants to make it unmistakably clear that those who speculate on their losses.
Central Bank in a critical-wait-and-see attitude
Since December last year efforts to make cryptocurrencies available for domestic trade by the central banks of Saudi Arabia and United Arab Emirates are on its way. Nevertheless, international financial business around cryptocurrencies is generally viewed critically in the country.
For example, Head of State Investment Supervision, said that there was a lack of Bitcoin supervision. He warned that cryptocurrencies could serve money laundering and terror financing. So crypto companies in the country have a difficult time and barely chance to gain a foothold. Central bank gives them no licenses. There are still no direct regulatory interventions in the Gulf state. However, Al Mansouri hinted that they were already on their way last February.
UAE – Rich thanks to oil
Economy of the United Arab Emirates is after Saudi Arabia not only the second strongest of the Gulf region, but in the entire Arab world. As financially solvent investors , Arab investors play an important role not only in domestic industrial hubs, but also on the international financial markets. The source of their wealth is the region’s most important mineral resource: oil. To what extent their money in cryptocurrencies so far, is pure guesswork. If for example, Bitcoin continues to be established in conventional finance, this should also be of the utmost interest to the gentlemen from Dubai and Abu Dhabi. And the move to new crypto currencies and ICOs would not be far off.
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