When asked when such a warning might occur, Tuominen told GlobalCapital that if it happened, it would be “soon”, as a “warning isn’t much use if it comes too late”. However, she emphasised that the regulator had not made a decision yet, and listed the warning as a potential tool to raise awareness of the potential dangers of the practice.
Tuominen also told GlobalCapital that a European member state authority would issue a warning on the practice next week, declining to say exactly which one.
ICOs have been regarded as a potential way for start-ups to raise capital and fund projects without falling under existing securities law.
Some tokens issued in ICOs entitle their holders to a share of profits from the project, while others allow holders to use a particular platform for a variety of services. Filecoin, which held its ICO in August, fell into this latter category. Filecoin allows token holders to store data with other people's unused digital storage space.
Tuominen refused to give an opinion on ICOs, saying that she wasn't informed enough on the practice to do so.
She added that ESMA was looking to contact individual national authorities investigating the issue to come up with a pan-European approach, emphasising that it was necessary to have consistency within the union.
ESMA's concerns over the industry come after a report by the US Securities and Exchange Commission in July in which the regulator said that issuing virtual currency may fall under federal securities law, depending on the circumstances of the case.
A number of jurisdictions have since ruled on the practice, with some like Switzerland coming out in favour of bringing ICOs into the scope of existing securities regulation, while others like China and South Korea have banned the tool.
The Commodity Futures Trading Commission, which regulates cryptocurrencies, on Tuesday released a primer on the topic via its LabCFTC platform in which the regulator said that "virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances".
The CFTC insisted that "there is no inconsistency between the SEC's analysis and the CFTC's determination" on the matter. However, the CFTC states at the top of the document that the "primer format" is "not intended to describe the official policy or position of the CFTC".
Two lawyers representing individuals involved with ICOs told GlobalCapital last week that they weren’t sure that the amount of ICOs used for capital raising activities was sustainable.
While conceding that the ICO model has certain inherent qualities, such as regulatory arbitrage and low barriers to funding, that makes it more attractive than traditional capital raising, the lawyers believed that many of the companies using ICOs to raise capital were inappropriate users of the method.
A managing director of R3, a consortium of firms looking to bring blockchain to financial markets, told GlobalCapital in July that many companies have "shied away" from traditional means of fundraising because they are "almost shell companies".
"They wouldn’t get venture capitalists involved, so they turn to crypto," he added.
The news comes after bankers and policymakers warned on the potential impact cryptocurrencies could have on areas like anti-terrorism, money laundering and tax evasion last week.