Austria to regulate ICOs, cryptocurrencies as securities

Austrian authorities are looking to bring in tight controls over ICOs…

Austria’s financial regulator, the Financial Market Authority, will change the country’s laws to regulate cryptocurrencies as securities, its lead administrators said in a press briefing.

Regulators have serious concerns that the booming but unregulated ICO market is a magnet for fraudsters, and are now proposing much more stringent rules to protect investors.

“Cryptocurrencies will be treated like securities in future,” pledged FMA board member Kurt Kumpfmuller.

Fellow FMA member Helmut Ettl quoted a study by New York-based ICO advisors Satis LLP which notes that 80% of ICOs conducted fraudulent activity, with only 8% of tokens going forward to trade on cryptocurrency exchanges. Cryptocurrency traders should fall under the same rules as forex traders, Ettl told Austrian paper Die Presse.

“For the purchase of and sale of foreign currency you need a mini-bank license. Bitcoin traders can do so without any qualifications. That’s not proportionate,” he said.

Ettl went on to say that in the past year his office had passed on 50 cases of suspected financial fraud to public prosecutors, 30 of which were for ICOs. The FMA is also proposing a minimum €2 million cap, or “threshold-dependent” requirement for token ICOs, to follow the model of how Austria treats securities. Companies launching ICOs would then pay a fee to the government in order to operate.

Lack of regulation in the country has hampered efforts to estimate the size of the market, said Ettl.

Across the world financial regulators are taking a much closer interest in ICOs. China is seen as relatively friendly to the crypto space, but its Banking Regulatory Commission has called for tighter rules on ICOs. In the US, the head of the SEC Jay Clayton has gone on the record several times to say he believes ICOs should be treated the same as securities and hence subject to rigorous reporting and legal rules.

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