In 2017, Initial Coin Offerings (ICO) were all the rage. However, after the U.S. Securities and Exchange Commission chased after issuers for securities violations, ICO was deemed risky for investors and gradually lost it’s appeal. Many crypto projects have now turned to Initial Exchange Offerings (IEO) to raise funds.
An Initial Exchange Offering (IEO) is a method for start-up companies to raise capital through the sale of tokens on a cryptocurrency exchange platform. This means that crypto exchanges play a crucial role in overseeing the token sale and ensuring that the project goes through a rigorous vetting process.
IEO vs ICO
Initial Coin Offering (ICO) is a once popular method that is used by start up to raise capital by issuing and selling their own tokens or coins to investors. Unlike IEOs where the token sale is organized by the crypto exchanges, ICOs are typically conducted by the project team itself. From managing the smart contracts, conducting the token sale and performing KYC/AML checks as well as marketing the tokens is all done by the project teams themselves. In short, IEOs provide the benefit of utilizing established exchanges for token sales, ensuring a higher level of investor protection and immediate liquidity, while ICOs involve direct project team management, which includes handling smart contracts, conducting the token sale process, performing KYC/AML checks, and marketing the tokens independently.
IEO operators in Malaysia
Back in March 2022, it was announced that the Securities Commission had registered two IEO operators which are: Kapital DX and PitchIn to facilitate responsible innovation in the digital assets sector. These operators will enable eligible companies to raise funds by issuing digital tokens, with a maximum limit of RM100 million. They must conduct assessments and due diligence, adhere to regulatory requirements within nine months, and implement robust anti-money laundering measures.
Kapital DX aims to provide investors with new opportunities in the private markets, allowing companies to raise funds more efficiently and at a lower cost. Powered by blockchain technology, it ensures security and transparency. KLDX aims to democratize access to capital, promote economic growth, and support companies in their growth ambitions while creating attractive investment options for investors.
PitchIn aims to make it easy for startups to find the funding they need to grow and succeed. Their belief is that capital should be accessible to everyone, and they are committed to helping entrepreneurs from all backgrounds.