The purchase of different initial coin offerings or ICOs can often lead to a great return on investment, but it can also be quite traumatic for an investors portfolio. A new report from a European regulator states that those who invest in ICOs could potentially lose all their money. According to the report “ICOs bear similarities to initial public offerings for a stock, but in an IPO, the investor usually has a stake in the company, whereas coin sales differ widely in terms of acquired rights.
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That’s been a primary criticism of ICOs, but differences in regulation are also important factors for investors to consider, according to Steven Maijoor, the chair of the European Securities and Markets Authority.” Maijoor stated that “you don’t have the regular protection that regulated investments offer, and can lose all of your investments. As a European securities market authority, we have warned, in November, about the so-called ICOs because while ICOs in principle can give you services in return for the coin that you buy, or a share in the revenue, this happens in a very unregulated space.” These issues have been plaguing many nations across the world from South Korea to China.
This was the brunt of the major issue surrounding ICOs in China back in September. In a harsh move by the government, the country decided to ban all ICOs within the nation as well as shutting down many of the top cryptocurrency exchanges within the borders. Since the industry is so new, it is extremely difficult to determine where to regulate it and where to leave it to the investors. As the market continues to grow, the hopes are high that this type of regulation can be created to help out those who choose to invest rather than going against them.