Dubai’s financial regulator on Wednesday cautioned potential investors the risks associated with online products involving cryptocurrencies, which it described as “high-risk investments.”
“The DFSA would like to make it clear that it does not currently regulate these types of product offerings or license firms in the Dubai International Financial Center, DIFC, to undertake such activities,” the Dubai Financial Services Authority said in a statement.
“Before engaging with any persons promoting such offerings in the DIFC, or making any financial contribution toward such offerings, the DFSA urges potential investors to exercise caution and undertake due diligence to understand the risks involved.”
The regulator said that these products usually involve the issuance of some form of virtual coin, token or other symbol of virtual currency in return for payment of a subscription price, and are offered to the public through fundraising events referred to as ‘Initial Coin Offering,’ ‘Initial Token Offering’ or ‘Token Sale’.
“The DFSA wishes to highlight that these types of product offerings, and the systems and technology that support them, are complex. They have their own unique risks, which may not be easy to identify or understand,” DFSA said.
“Such risks may increase where offerings are made on a cross-border basis. These offerings should be regarded as high-risk investments.”
Earlier this week Jamie Dimon, the chief executive of JPMorgan Chase & Co, described bitcoin as a ‘fraud’ and was ‘worse than tulips bulbs,’ referring to a famous market bubble from the 1600s.
“The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Dimon said at a banking investor conference in New York.