bafin ico regulation

Double Check That ICO Investment: Top German Finance Authority

BaFin – Top Financial German Regulatory Agency or the Bundesanstalt für Finanzdienstleistungsaufsicht [German for: the Federal Financial Supervisory Authority] – has just announced a warning statement about what possible threats and risks investing towards ICOs [Initial Coin Offerings] can take place.

In a due diligence memorandum, BaFin went on the record for German investors, officially stating that excitement in ICOs must be tempered with the speculative reality of digital assets:

“ICOs are a highly speculative form of investment. Investors should therefore be prepared for the possibility of losing their investment completely. As is the case with most new trends, the high level of public interest in ICOs is also attracting fraudsters.”

BaFin is also majorly concerned with the extreme volatility and lack of guarantee for tokens post-ICO, noting:

“Tokens acquired in an ICO often experience significant price fluctuations. There is a risk of there being no liquid secondary market or no secondary market at all where the investor can sell the tokens acquired in order to liquidate the investment at a profit.”

The tone is very bearish for now as to an ICO crackdown for German crypto-investors, but the warning displayed an environment of no governmental protection for anybody that leans towards the Offerings for profit.

“Due to the lack of legal requirements and transparency rules, the consumer is left on their own when it comes to verifying the identity, reputability and credit standing of the token provider and understanding and assessing the investment on offer.”

Perhaps continued authoritative regulatory declarations like these can help to tamper down on the “irrationality” that Ethereum co-founder Joseph Lubin has identified in the ongoing ICO craze.