CMA says has not approved any Initial Coin Offering

Paul Muthaura CEO Capital Markets Authority

NAIROBI, KENYA: The Capital Markets Authority has issued a warning to Kenyans against initial coin offerings.

Initial Coin offerings (ICOs) involve creation of digital coins using distributed ledger technology and subsequent sale to investors. CMA says in a statement that there are ongoing invitations to members of the public to invest in such coins in what is being marketed as “pre-sale before launch on public exchanges.”

“It is notified for the general information that the Capital Markets Authority has not as of this date approved any initial coin offering. The ongoing offerings are unregulated and speculative investments with considerable risk to the investor,” said the Authority.

Some of the risks as identified by the International Organisation of Securities Commission, which Kenya is a member of, include heightened potential to fraud, cross border distribution risk, information asymmetry and liquidity risk.

“Like crypto-currencies in general, tokens traded on virtual currency exchanges may give rise to opaque and volatile pricing, often coupled with insufficient liquidity to support trading and markrt making activities.”