IOSCO warnings

IOSCO is the leading international policy forum for securities regulators and is recognized as the global standard setter for securities regulation. The organization’s membership regulates more than 95% of the world’s securities markets in more than 115 jurisdictions and it continues to expand.

In its meeting on 18-19 October 2017, the Board of the International Organization of Securities Commissions (IOSCO) discussed the growing usage of ICOs to raise capital as an area of concern.

According to IOSCO, there are clear risks associated with these offerings. ICOs are highly speculative investments in which investors are putting their entire invested capital at risk. While some operators are providing legitimate investment opportunities to fund projects or businesses, the increased targeting of ICOs to retail investors through online distribution channels by parties often located outside an investor’s home jurisdiction,  which may not be subject to regulation or may be operating illegally in violation of existing laws, raises investor protection concerns.
There have also been instances of fraud, and as a result, investors are reminded to be very careful in deciding whether to invest in ICOs.

A list of all the Regulators’ Statements on Initial Coin Offerings can be found at IOSCO’s website.

Another alert concerns Generic Top Level Domains Program (gTLD Program). It means domains with the following ending: capital, .cash, .cashbackbonus, .broker, .brokers, .claims, .exchange, .finance, .financial, .fianancialaid, .forex, .fund, .investments, .lease, .loan, .loans, .market, .markets, .money, .pay, .payu, .retirement, .save, .trading, .autoinsurance, .bank, .banque, .carinsurance, .credit, .creditcard, .creditunion, .insurance, .insure, .ira, .lifeinsurance, .mortgage, .mutualfunds, .mutuelle, .netbank, .reit, .tax, .travellerinsurance, .vermogensberater, vermogensberatung and vesicherung.

According to IOSCO, investors and consumers should note that the registration and use of one of these domains by a financial services company, investment firm or individual does not guarantee that the company or person using it has been authorized to operate by the relevant financial services regulator.

Investors and consumers are urged to consult the registry of authorized financial entities and individuals in their jurisdictions in order to confirm whether a company or individual using one of these domains is authorized to offer financial services. Unlike investors and consumers who employ authorized entities, those who deal with unauthorized firms and individuals receive no legal protection.