Authorities in the United Arab Emirates (UAE) are warning their citizens against the dangers of investing in the cryptocurrency market.
The emirate’s Securities and Commodities Authority (SCA) on Friday February 2nd 2018 raised an alarm regarding all digital token-based fundraising activities or investment schemes in the UAE, whether referred to as initial coin offerings (ICOs), initial token offerings, token presale, or token Crowdsale.
The SCA believes that some of these ICOs are not always well supervised and are therefore susceptible to fraud and financial losses. The authority noted that ICOs that are issued overseas and outside of their jurisdiction will prove difficult to track and recover funds from in case when problems arise.
Tracking and recovering funds in case of a foreign ICO collapse may prove to be extremely difficult in practice, the authority warns,
The SCA furthermore noted that it does not recognize, regulate, or supervise any ICO presently and that ICO investments are not offered legal or regulatory protection. The body further advised that investors looking to take part in any cryptocurrency investments do so at their own risk.
The authority went on to reiterate that “digital tokens 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 [emirate’s] applicable laws and regulations.”
According to the CCN news, the SCA is merely following the guidelines released in October 2017 by the UAE government on cryptocurrencies and initial coin offerings.
CCN news reports that the UAE “joins a number of other global counterparts in recent months to have issued warning to residents on risks related to investment in ICOs”.