Factbox: National regulators' views on initial coin offerings

(Reuters) - The emergence of bitcoin in 2009 as the first decentralized digital currency using cryptography as a security feature has spawned more than 1,200 new digital crypto-currencies, with coins, or tokens, sold by crypto-currency firms to fund their projects one of the fastest growing applications.

With more than $3 billion raised in “initial coin offerings” (ICOs) this year so far, dozens of regulators around the world have responded with some form of regulations or guidelines. Here are some responses:


The Financial Services Regulatory Authority adopted a technology-neutral approach in its guidelines released in October. The regulator said as long as the virtual tokens were used to enable or facilitate a regulated activity, they were generally permitted.


The British territory in the Caribbean has said it planned to enact a law covering the registration of initial offerings of “utility tokens” that give buyers access to a service or a product. The law, called the Anguilla Utility Token Offering Act, establishes the registration process for a crypto-currency offering.


The Cayman Islands Monetary Authority (CIMA) has not made any public comment about ICOs, but coin issuers are required to register as a provider of a “money services business.”


Beijing banned the sale of crypto-currencies and tokens outright in September this year, saying in a statement ICOs have disrupted the economic and financial order. Any individuals or organizations that have completed fund-raising through a coin offering should make arrangements to return the funds, and ensure that the legitimate rights and interests of the investors are protected.


The Dubai Financial Services Authority has issued a warning on ICOs in September, but in an emailed response to Reuters it said it needed to review the types of ICOs and their potential impact on investors and markets, before formulating its views on any need for action.


The British territory said in September that starting from January 2018 it would have a new regulatory framework for firms operating or based in Gibraltar using the blockchain technology.


The Israel Securities Authority (ISA) has announced a plan to form a panel to regulate initial coin offerings and consider to what extent securities regulations would apply to coin sales.


Japan’s Financial Services Agency has issued a warning in late October about the risks of investing in ICOs. Although Japan has no specific laws on ICOs, they may be regulated by two existing laws: the Payment Services Act and the Financial Instruments and Exchange Act.


The country’s Securities Commission warned investors in September that digital coin offerings may be unregulated, possibly exposing them to fraud. It said such sales could also be parts of money laundering schemes or the financing of terrorism.


The Monetary Authority of Singapore said in August while in general it did not regulate virtual currencies, it would do so if the digital tokens constituted products subject to Singapore’s Securities and Futures Act.


The nation’s financial regulator in September prohibited domestic companies and startups from participating in ICOs and said that those involved would face “stern penalties.” South Korea has no plans to regulate bitcoin trading.


While its Financial Market Supervisory Authority does not have rules designed specifically for ICOs, some parts of the procedure may be covered by existing regulations depending on how such an offering is structured, the regulator has said. The authority said in September that it had started to investigate a number of ICOs for possible breaches of Swiss law.


The Financial Conduct Authority warned in September that coins issued in public offering were subject to extreme volatility, often carried little or no investor protection, and were high-risk given their unregulated nature and early stage of many projects. It is now considering whether to introduce specific regulations on digital coin sales.


The Securities and Exchange Commission has declared that public token sales are subject to federal security laws. Tokens can be considered securities, and therefore, may need to be registered unless a valid exemption applies.

The Commodity Futures Trading Commission has said crypto assets may also be regarded as commodities.

Reporting by Gertrude Chavez-Dreyfuss and Angela Moon; Editing by Tomasz Janowski