The regulator of Germany has warned about the «numerous risks» ICO

Federal financial Supervisory authority of Germany (BaFin) called the initial range of coins (ICO) “highly speculative investment” and warned investors about involving in it many risks.

The financial regulator urged investors to be careful about these risks and be prepared for a complete loss of money. A high level of public interest in the ICO also attracts fraudsters, said in a statement.

The obvious similarity of the terms «original proposal» and «initial public offering IPO» creates the false impression that the ICO is comparable to the share issue, said the administration. However, they do not correlate neither with legal, nor from a technical point of view.

According to BaFin, the main risks associated with participation in ICO, is of significant fluctuations in the price of tokens, the absence of a secondary market, the complexity of assessing the potential of the project for the technically untrained investor, insufficient or false information stated by the Issuer, the lack of protection of personal data.

“The ICO system vulnerability to fraud, money laundering and financing of terrorism increases the risk that investors will lose the invested amount. Especially because of the ability of the authorities to take the necessary action against the operators, other persons or entities involved in such illegal transactions,” — said in a statement.

Management has not announced any measures for the regulation of the ICO and promised to publish November 15, a new statement with more information.

“Before a consumer decides to participate in the ICO, it needs to ensure that fully understand the benefits and risks of a project or investment,” warned BaFin of investors.

Recall that in many countries, including USA, UK, Malaysia, Gibraltar, Russia and Dubai, the regulators issued similar statements. The authorities of China, South Korea and El Salvador banned the ICO.

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