KNF warns against ICO and investing in cryptocurrencies

In recent days the Polish Financial Supervision Authority has issued an official warning against investing in the so-called ICO (Initial Coin Offerings) or ITO (Initial Token Offerings), or funding for the release of dedicated virtual coins. Thus, it is already the next European regulator that decided to issue official information considering the purchase of tokens as highly risky.

Similar warnings recently issued regulatory institutions from such countries as: USA, Canada, Brazil, Australia, Singapore, Hong Kong, Japan, China, Great Britain, Germany, France, Switzerland, Belgium and the Netherlands.

You do not want to lose, do not invest

Polish supervision primarily focuses on regulations, and more specifically their lack, which are not covered by the very dynamically developing crypto market. This means that the capital invested can be completely lost, and at the same time it is not covered by any legal protection.

In the KNF communication you can read:

"The implementation of such projects takes place using new technological possibilities. Entities performing ICOs use the Internet and social media while acquiring funds. On an increasing scale, famous people are involved in the promotion of individual ICOs offers, including from the world of sports and show business, which are to make the promoted investments more attractive. It should be emphasized that ICOs activities may potentially be subject to a number of legal requirements, including the creation of a prospectus and public offering, the creation and management of alternative investment funds, and investor protection, although they must be assessed through the prism of a specific case. "

Investor, watch out for ... Cryptocurrencies

The home regulator indicates five main risks that the investor should pay attention to and take special care towards them:

• Unregulated space, prone to fraud or other irregularities
• High risk of losing part or all of the funds invested
• No information, inadequate documentation
• No possibility to "exit" from the investment and very high volatility of value
• Disadvantages of the technology used

In the communication, the Commission reminds that conducting business activity without permits required by the provisions of the laws regulating the financial market is subject to criminal law.

Marek Chrzanowski, president of the Polish Financial Supervision Authority, announced that this will not end and the Office is preparing an information campaign on the risks associated with cryptocurrencies on a much larger scale. The action is to start in the coming months.

It should be mentioned, however, that at the present moment, according to the portal Coin Market Cap, the market capitalization of cryptocurrencies is now 259 billion and is in a strong uptrend.

NBP joins the action

Already in July this year, the PFSA and the NBP together they started an information campaign on threats related to virtual currencies. And now it is similar. At last week's meeting, NBP representatives announced that cryptocurrencies did not have their support. And the deputy president of the NBP, Piotr Wiesiołek, insisted that virtual currencies can be easy prey for thieves and reminded that they are not covered by BFG guarantees. He also pointed out that these are highly speculative instruments with high volatility and some of them may function as financial pyramids.

He assured, however, that the Polish central bank does not mind using the latest technologies in finance, i.e. blockchain technology.

Full KNF message