Following hot on the heels of the US Securities and Exchange Commission’s recent alert for investors on Initial Exchange Offerings (IEOs), the Securities Commission (SC) of Malaysia has also released an official update on guidelines to digital token offerings and their stance on IEOs as well, effective in the later half of 2020.
Currently, companies that wish to make available a token offering to the public require approval from the SC. Offering a token without necessary approval is illegal and for approval to be given, digital tokens can only be offered via IEO platforms.
According to the document:
“An issuer must only carry out an offering of digital tokens through an IEO platform and not through any other means;
An issuer must submit its application to an IEO operator for an approval in a form and manner as may be specified by the IEO operator, including a fit and proper declaration of its Board members and senior management and the issuer’s Whitepaper;
An issuer must not offer any digital tokens to any person before the IEO operator’s approval has been obtained;
The issuer must also demonstrate to the IEO operator that the digital token’s underlying business or project provides an innovative solution or a meaningful digital value proposition for Malaysia.”
In this case, both the company offering the digital token and the IEO platforms which onboard these projects are held equally responsible in obtaining approval from the SC, whereby failure to do so will result in penalties on both parties.
Moreover, there are brief restrictions on the type of digital token projects the SC prefers to see, as the project has to propose an “innovate” and “meaningful” solution or proposition which benefits Malaysia via the application of Distributed Ledger Technologies (DLTs).
The US SEC may have inadvertently set a precedent for clearer regulations on IEO, and we can expect many other countries after Malaysia to follow suit.
