Luxembourg Financial Regulator is Next to Warn About ICOs & Virtual Currencies

Luxembourg is the most recent country to issue a warning to consumers regarding the hazards of initial coin offerings and virtual currencies. The Commission de Surveillance du Secteur Financier (Financial Sector Supervisory Commission) has issued an almost perfunctory statement.

In two separate documents, the CSSF commented on ICOs and tokens and then virtual currencies.

Speaking about the risk of ICOs and tokens, the CSSF stated:

The Financial Sector Supervisory Commission (CSSF) warns the public of significant risks related to ICOs. These offers for funding often use the attraction of new technologies and virtual currencies, or related projects, to promote their activities to potential investors. In this context, the CSSF recognizes and wishes to underline that the technology underlying these ICOs, blockchain technology, can bring certain benefits through its use in activities of the financial sector and in innovative projects of different categories. As a result, the CSSF states that this warning relates fundraising through ICOs that use this technology without wanting to question the technology itself. ICOs are a form of public fundraising aimed at financing the launch of new currencies virtual or all kinds of new projects.

The CSSF warns the public that ICOs are not subject to specific regulation and investors are told to purchase with extreme caution. The regulator also warns they could lose all of their money.

Regarding virtual currencies such as Bitcoin or Ethereum, the CSSF says these are unregulated and highly volatile vehicles that are susceptible to criminal actions. Purchasers should be prudent in their acquisition.

Luxembourg encourages a pan-European regulatory approach as an introduction of a national law would have only limited effects on virtual currency usage.

 

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