UAE Regulator Cautions on ICOs

UAE’s Securities and Commodities Authority warns about investing risks

by Marina Ovcharova
05 February • 1.5 min
In Regulation

The United Arab Emirates Securities and Commodities Authority (SCA) warns the country’s citizens about the risks of purchasing tokens in initial coin offerings (ICO) in a circular from 4 February. It says that investors should be extra careful when closing financial operations that concern ICO fundraising and token pre-sales.

ICO deals can be misleading

SCA advises residents to be aware that an ICO project can be presented in a manner, that leads to a misunderstanding of the risks in hand. Also, the predictions and analysis of the possible financial outcome after the tokens enter the markets remain uncertain.

In addition, the agency warns that currently no ICO campaign is regulated in any way by the country's authorities, therefore in case of violations no legal help can be offered to investors.

Foreign ICO projects cannot be considered a safe alternative, the SCA states, reminding to local investors that not all financial markets are regulated on state level. It points out that even for the ones that are, they are subject to foreign jurisprudence and in case of fraud or disturbance, refunding can appear to be difficult and time-consuming.

UAE becomes one of many

The risks of investing in ICOs has already been stated out by the financial authorities of several countries. A similar warning has been issued by the government in Abu Dhabi, concerning its anti-money laundering efforts in the ICO field.