The Securities Commission Malaysia (SC) on Wednesday published detailed guidelines for the digital asset industry, mandating token sales on initial exchange offering (IEO) platforms.
Per the regulatory agency, an initial coin offering (ICO) is an innovative business proposal to raise capital before it is able to do so through venture capitalists or lenders, without selling equities or taking out debt.
Apart from the obligatory issuance of token sale in IEO platforms, the regulator also put a cap on the maximum funds, which can be raised by the technique.
A ceiling of RM100 million (around $24.5 million) will be applicable on ICOs; however, there is no restriction on the investors, meaning blockchain companies can tap on retail, sophisticated as well as angel investors.
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After the token sale, the market watchdog will also conduct post-issuance monitoring of the utilization of the proceeds.
“Digital tokens offering can provide another alternative fundraising avenue for early-stage entrepreneurs. This initiative supports Malaysia’s Shared Prosperity Vision 2030 (SPV2030) by supporting the growth of SMEs and micro businesses which are targeted to contribute 50% to Malaysia’s GDP. It also aligned with SPV2030’s aspiration to create 30% high technology Malaysian companies,” said Datuk Syed Zaid Albar, chairman of the SC.
Creating a secure environment for ICOs
Along with the rules for ICOs, the agency also brought restrictions for IEO platforms. Per the issued guidelines, such platforms providing services in the country should register themselves with the regulator.
IEO platforms also need to carry out the necessary assessment and due diligence to verify the business of the issuer and the fit and properness of the issuer’s board, as well as understand the features of the digital tokens.
The SC is aiming to implement the new guidelines in the second half of this year. The regulator also detailed that during the first phase of the implementation of the guidelines, it will work with the relevant platform operators in assessing eligible issuers.