European Central Bank Eyes ICO Regulation

With initial coin offerings getting attention from regulators around the world, European Central Bank governing council member Ewald Nowotny has disclosed that the European Central Bank is looking at putting regulation on the books regarding ICOs.

In an interview with the Austrian weekly magazine Trend as covered by Bloomberg, he said the ECB is looking at putting “concrete legal restrictions in place,” saying the hype cryptocurrencies are garnering is “dangerous and deeply dubious.”

The ECB council member did not say what the restrictions may be and what control the ECB actually has when it comes to regulating ICOs. The comments come as regulators are issuing warnings to investors about the risk of investing in ICOs, but have largely stopped short from banning them. The only two countries to ban ICOs are China and South Korea.

The council member’s comments came as Reuters reported that the Swiss financial watchdog FINMA announced it is investigating a number of ICOs for possible breaches of Swiss law. According to the report, the Swiss investigation is FINMA’s second crackdown in less than two weeks, and could lead to greater regulatory oversight of some of the most prominent blockchain projects in Crypto Valley, located in Zug, Switzerland.

“FINMA has observed a marked increase in initial coin offerings conducted in Switzerland,” the report said.

Switzerland is the latest nation to take a harder look at this new crowdfunding method, which allows cryptocurrency entrepreneurs to raise millions by creating and selling digital “tokens.” Several regulatory bodies, including those in the U.S., China, Hong Kong, Singapore and Russia, have warned that lack of financial regulation has made ICOs popular with scammers.

This month, FINMA closed down what it said was the provider of a fake cryptocurrency, stating that it was investigating around a dozen other possible cases of fraud. Currently, Switzerland does not have rules governing conduct specifically for ICOs. But depending on how an ICO is structured, some parts of the procedure may be covered by existing regulations, FINMA said.