Singapore’s central bank has issued an investor warning about the risks of initial coin offerings (ICOs).

A new notice from the Monetary Authority of Singapore (MAS) – published in tandem with the Commercial Affairs Department (the administration layer for the city-state’s police force) – advises prospective investors to investigate and understand the risks associated with buying into token sales.

Among the suggestions offered for investors is that they should deal only with firms licensed by the MAS itself.

The notice states:

“The laws administered by MAS require disclosure of information on investment products being offered to consumers. MAS-regulated entities are also subject to conduct rules, which aim to ensure that they deal fairly with consumers. If consumers deal with entities that are not regulated by MAS, they forgo the protection afforded under laws administered by MAS.”

The statement highlights other risks, including the potential for a lack of market liquidity, the high rate at which startups fail and the potential for fraud.

The MAS said that consumers who suspect that a token-based investment scheme may be fraudulent, “should report such cases to the police.”

The warning comes just over a week after the MAS issued a statement detailing that, under its rules, some token sales may qualify as securities offerings. The U.S. Securities and Exchange Commission released a similar advisory late last month.

ICOs have steadily gained traction in recent months, according to CoinDesk’s ICO Tracker. To date, nearly $1.7 billion has been raised through the funding model, with more than $500 million in the last month alone.

Singapore image via Shutterstock