What does this mean for investors and firms involved in ICOs?
ICOs come in different sizes and forms. They also offer different risk exposures to different business models across different jurisdictions and their legal systems. The rapid development of ICOs and the rapid expansion of cryptocurrency has caused concern amongst policymakers and supervisors. A key driving force for that concern is that much of the activity lies beyond the existing ‘regulatory perimeter’ and thus presently unregulated or open to market participants who may not be fully cognisant of their regulatory obligations. This Client Alert provides an overview of ESMA's two short ICO Warning Statements released on 13 November 2017. It discusses of how the two statements fit in to the string of supervisory communications of the national supervisory authorities that make up the EU's European System of Financial Supervision (ESFS). Finally, it considers the impact on cryptocurrency stakeholders and the future of ICOs.