IOSCO warns investors about risks of crowdfunding and Bitcoin

The International Organization of Securities Commissions (IOSCO) has included crowdfunding on their list of investor risks, along with Bitcoin and other cryptocurrencies.

IOSCO looks closely at risks of cryptocurrencies and crowdfunding

As investors around the world seek to diversify their portfolios, disruptive new models are beginning to gain traction compared to government bonds, stock trading or foreign exchange. These concepts include crowdfunding and digital currencies, both of which are clearly risky investments, according to IOSCO.

IOSCO is an international cooperation organization composed of securities and futures regulatory agencies. Member organizations work together to formulate common guidelines and establish an effective regulatory mechanism for the international securities industry to ensure the fairness and effectiveness of the securities market, and jointly curb cross-border illegal transactions and promote transaction security. In addition, IOSCO members seek to share their knowledge and guidance with investors around the world so that they can understand potential risks and traps.

Some may remember that last year, the IOSCO warned investors not to get too excited about the concept of FinTech. Now, they are warning about crowdfunding and digital currencies like Bitcoin, and it seems that they have been left behind again, as even the world's major banks have moved on to study the underlying and potentially disruptive technology of Bitcoin - blockchain.

The IOSCO March report noted the following:

Some examples of potential avenues of change brought about by technological revolution, often referred to as ‘digital disruptors’, in securities markets include: payments (i.e. cryptocurrencies); fundraising through crowdfunding and peer-to-peer lending; the proliferation of smartphone apps; distributed ledger technology; and the use of ‘big data’ to better understand the needs of consumers of financial services.

Crowdfunding and cryptocurrencies are not new concepts as they have been around for several years. However, this is not the first time that IOSCO has warned against these investment opportunities.

It is worth mentioning that the report also mentions five different innovation areas that will disrupt the financial services industry.

However, the real innovation is coming from equity crowdfunding and peer-to-peer lending platforms. Both solutions are geared towards small and medium-sized enterprises and entrepreneurs around the world. Since these concepts cannot be controlled by banks or governments, it is no surprise that IOSCO has issued a warning to investors.

What do you think of the IOSCO report?

Original article: https://news.bitcoin.com/iosco-warns-risks-bitcoin-crowdfunding/
By Jean-Pierre Buntinx
Translation: Overnight porridge
Source (translation): Babbitt Information (http://www.8btc.com/shapeshift-lost-230k)