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From ICO to IEO: Malaysian Token Issuers Must Now Put $122,000 on the Table to Raise Fund

The start of the new year came along with new regulations to better govern digital currencies, with several countries already releasing or proposing a new set of rules for crypto-related businesses and services.

A recent document released by Malaysia’s Securities Commission (SC) featured guidelines on Initial Exchange Offering (IEO) platforms as the only approach for digital token issuers to take when raising funds for their crypto projects in the country.

Every other fundraising platforms, including Initial Coin Offering (ICO), are not approved by the Securities Commission. The document further noted that the issuers must have the business and operations carried out in the country if at all, it must be eligible.

What is an Initial Exchange Offering (IEO)?

What Is an Initial Coin Offering (ICO)? A Complete Beginners Guide

The guidelines, which enter into force in H2 2020, entail that prospective issuers must satisfy governance and meet a capital requirement of at least $122,000 (MYR 500,000) to qualify for fundraising through IEOs.

Token issuers may choose to raise funds to $24.6 million (MYR 100 million) at maximum within any continuous 12-month period via investments from sophisticated, retail, and angel investors, subject to investment limits.

As reported, the retail investors are to invest a maximum of MYR 2,000 per issuer and a maximum total of MYR 20,000 across all issuers within a year. 

While there’s no restriction on investment amount for sophisticated investors, the angel investors are allowed to invest a maximum of MYR 500,000 within a year.

All digital token offerings should be conducted through IEO platform operators registered with the SC, who will then verify the business of the issuer, its eligibility, and the features of the digital tokens, per the report. 

Also, each token issuance must be accompanied by a whitepaper. It should provide investors with information about the digital token, the issuer, and how the funds will be used, as per the document.

“Digital tokens offering can provide another alternative fundraising avenue for early-stage entrepreneurs,” Datuk Syed Zaid Albar, the SC chairman, said, adding that the token offering initiative supports the country’s vision for 2030, as it facilitates the growth of SMEs and micro-businesses in Malaysia.

On January 2019, Malaysia legalized digital assets and ICO tokens, according to the Finance Minister, Lim Guan Eng.


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