Crypto Coin Sales Get Fresh Regulatory Scrutiny as ECB Weighs In

(Bloomberg) -- Regulators across the globe are increasingly taking an interest in initial coin offerings, with European Central Bank Governing Council member Ewald Nowotny being the latest to weigh in.

The ECB is discussing putting “concrete legal restrictions in place” as the hype around digital currencies like bitcoin is “dangerous and deeply dubious,” Nowotny said in an interview with Austrian weekly magazine Trend. It's unclear what those legal restrictions may be and what powers the ECB has over ICOs. What's clear though, is that central banks are likely to be skeptical about a technology that was created to bypass them.

While China and South Korea went as far as banning the fundraising mechanism, most watchdogs have taken a cautious approach, saying some digital tokens are securities and should be regulated accordingly, without providing an actual framework or list of requirements to define which projects fall in which category. Beyond issuing those words of caution, there hasn't been a broad-ranging crackdown of tokens that do qualify as securities.

Switzerland took that path last week, with its financial regulator saying it's investigating a number of ICOs; that probably sounded off alarm bells across the crypto community since Zug has become a popular hub for issuing digital coins. The U.S. Securities and Exchange Commission issued a similar warning back in July.

While ICOs slowed in August, after the SEC statement, they've picked up again, signaling developers aren't too worried about regulators increasingly peering in.

To contact the reporter on this story: Camila Russo in New York at crusso15@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Brendan Walsh