German Financial Regulators Inform About the Risks Associated with ICO

There was a warning made by the financial regulators of Germany, especially the supervisory authority of financial federation- BaFin related to ICO (Initial Coin Offerings). This case has made BaFin the watchdog of ICO’s and the latest one to give out the information.

During this scenario, BaFin had informed about the threats associated with the sale of tokens and about the initial coin offerings.

This threat is related to a chance of losing an individual’s complete investment. They had already informed about the Initial coin offering as a model of funding that attracts fraudulent activities which may falsely represent their tasks to a targeted investor.

A part of the document mentions that since there is a negligence of the needs of legalized rules of transparency required, the users are completely unaware when they are left to scrutinizing the identity, reputation and the credit worth of the token giver and getting to know about the assessment of the investments during an offering. It may not be established that the investor’s data might be secured with the standards prescribed by Germany.

Requirements of BaFin

Even though BaFin had not initiated any prerequisite or condition for the initial coin offering organizers for the updated statement, it was mentioned that there will be a release of an inclusive detailed channel for the users on 15th November.

BaFin also informed that prior to any decisions made to carry on with the ICO agreements, the investors should have a thorough understanding about the advantages that can be reaped and also the threats associated with the procedure. Moreover, they also reported that additional back up is needed for the possibility of losses they might incur in the sale of tokens which might be a fraudulent activity.

They said that prior to making any decisions regarding investing in the initial coin offerings, every individual should have a complete knowledge of the advantageous and the threats associated with the investments made.