Initial coin offerings – are they worth a look?

PETALING JAYA: The flourishing initial coin offering (ICO) industry seems to have been cast in an unfavourable light in Malaysia, particularly after the ban on Singapore-based CopyCash’s issuance imposed by the Securities Commission Malaysia (SC).
While the regulator has stated that it is engaging with 12 ICO issuers currently, none of the offerings appear to have been launched.
Luno Malaysia marketing/community lead Aaron Tang, for one, cautioned that most ICOs are not structured in the right way and are mostly focused on the “raising money” part.
“Also, most ICOs are pure scams as we all know quite well. Regulators in Malaysia and the rest of the world have also been paying closer attention to ICOs as a result of this. Hence, although the model holds promise, overall the market is quite frothy and overblown,” he told SunBiz.
ICOs are a digital blockchain-based form of public fundraising for entrepreneurial purposes as well as source of capital for startups.
Tang said Luno does not engage in any ICO-related activities or list ICO tokens. “We are focused on bringing the most-established digital currencies to customers, in an easy and safe manner.”
For Singapore-based Global Crypto Offering Exchange (GCOX), it plans to launch its ICO in the second quarter of the year to fund its own digital currency “Acclaim”, which will be undertaken in three tranches and is expected to raise US$300 million to US$400 million (RM1.17 billion to RM1.57 billion) in each tranche.
GCOX is the world’s first cryptocurrency exchange that only lists celebrity tokens on its decentralised blockchain. It aims to revolutionise the interaction between celebrities and fans by bringing about closer engagement on its social media platforms, namely Celeb-Listing, Celeb-Connect, Celebreneur and Celeb-Charity.
“The ICO is for our new blockchain; hopefully, when the market understands what the platform allows them to do, it will generate a lot of interest,” GCOX chief communication officer Evan Ngow said in a recent interview with SunBiz.
He stressed that the company has gone through a very stringent legal process to ensure that it is in compliance with the rules and regulations in respect of the ICO launch.
“To lump all ICOs as scams is very unfortunate and it is not fair as there are good ICOs in the market. For those who want to invest in ICOs, you have to read their white papers first. It gives you a basic understanding of what the ICOs are, the potential as well as the promise.”
International boxing superstar Manny Pacquiao is the first celebrity to have signed on with GCOX, for the release of his exclusive celebrity token known as the “PAC Coin”.
Former UK football star Michael Owen has also joined GCOX as celebrity, private investor and member of its board of advisers. Similar to Pacquiao’s case, Owen will have his own celebrity token called “OWN Token” on the platform.
Prof Vikram Pandya, director of FinTech at SP Jain School of Global Management, opined that an ICO is an excellent mechanism to augment the capital through crowdsourcing for innovative projects, which directly challenges traditional model of venture capital and private equity funding. “It has allowed many projects to get funding without going to ‘silicon valleys’ of the world.”
However, he said there is a need for a proper regulatory framework for ICOs to prevent abuse of the system. “It is in essence similar to an IPO but with several peculiar nuances of its own. A dedicated framework for ICOs will ensure that fraudsters and scammers will not be able to abuse this system.”