For further information,
please contact:
Legal Alerts

CMB Warns Investors About Initial Coin Offerings

Legal Alerts
Capital Markets

Recent Developments

The Capital Markets Board (“CMB“) warned investors about the risks of initial coin offerings (“ICOs“) in its bulletin dated September 27, 2018, stating that ICOs will not be subject to its regulations.

What Does the Announcement Say?

  • ICOs, also described as “cryptocurrency sales” or “token sales,” aim to procure funding by using block chain technology. ICOs are mostly out of the scope of the CMB’s regulation and supervision.
  • The CMB warned investors about ICOs, stating they are highly risky and speculative investments; their valuation could be extremely volatile; and that investors incur the risk of losing the entirety of their original investment.
  • The CMB indicated that ICOs may have similar aspects to initial public offerings and crowdfunding that could make them a regulated activity, depending on their characteristics.
  • The CMB emphasized that the drafting of the secondary legislation regarding crowdfunding is ongoing. Unauthorized offerings conducted under the name of crowdfunding before the foregoing legislation’s entry into force will be subject to administrative and penal sanctions.


Because ICOs are not explicitly regulated, they are generally outside of the CMB’s scope of supervision. Investors should evaluate ICOs’ legal character and consider their legal and commercial risks before taking an investment decision.