In an official statement, Securities Commission Malaysia (SC), a statutory body with investigative and enforcement powers, has warned the public against initial coin offerings (ICOs) related investment schemes.

The regulator noted the growing popularity of digital token based fundraising activities in Malaysia and highlighted the potential risks involved in such schemes:

• “Scheme operators may not have presence in Malaysia and it would be difficult to verify the authenticity of the scheme and the recovery of invested monies may be subject to foreign laws or regulations
• Some ICO schemes and the parties involved operate online and may not be regulated, investors may be exposed to heightened risks of fraud, money laundering and terrorism financing
• Digital tokens traded on a secondary market may give rise to risks of insufficient liquidity or volatile and opaque pricing
• The structure of these ICO schemes might limit the legal protection and recourse for investors against scheme operators”

The SC urged investors to also fully understand the features of an ICO scheme, and carefully weigh the risks before parting with their monies.

Regulators across the globe are increasingly warning the investors against ICO related investments. The Securities and Exchange Commission (SEC) recently urged investors to exercise high caution when dealing with ICOs, while China called an immediate ban of all ICO activities. More recently, the Bank of Russia also warned the public saying that it does not guarantee cryptocurrencies, adding that most cryptocurrency-related operations are performed out its legal regulation.

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