Initial Coin Offerings Are Very High Risk

Bitcoin Spread Betting
UK Regulator “be prepared to lose your entire stake”

What is an Initial Coin Offering (ICO)?

An Initial Coin Offering (ICO) is like an Initial Public Offering (IPO) but with funds being raised for a new cryptocurrency scheme.

Investors put in real (fiat) money, or another cryptocurrency (typically Bitcoin), into the start-up.

The start-up itself is a cryptocurrency firm.

In return for investing, investors are issued digital tokens or some of the new cryptocurrency.

An ICO is designed to be quick and bypass the normal capital-raising rules laid down by regulators.

Warnings Against Initial Coin Offerings

4 September 2017: China Bans Initial Coin Offerings.

13 September 2017: The UK financial regulator, the FCA, issued a clear warning on ICOs saying they are:

Very high-risk, speculative investments… You should be conscious of the risks involved … and be prepared to lose your entire stake.

19 September 2017… Investor Caution Obligatory

The Economist has also written an article on ICO’s called “investor caution obligatory“.

If you click through on the above link and find “You’ve reached your article limit” then this quote gives you the gist of the author’s view

This sounds like the kind of bargain that would appeal only to people who reply to emails from Nigerian princes offering to transfer millions into their bank account.

For more on cryptocurrency trading see our cryptocurrency spread betting guide.

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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