Frankly Speaking: First, get nod from regulator for ICOs

This article first appeared in The Edge Malaysia Weekly, on October 8, 2018 - October 14, 2018.
Frankly Speaking: First, get nod from regulator for ICOs
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The Securities Commission Malaysia (SC) has maintained its strict stance on fundraising activities via initial coin offerings (ICOs), warning investors of the potential risks in buying into pre-sales of cryptocurrencies. Digital asset issuers must obtain the relevant approval from the regulator before launching their coins.

Country Heights Holdings Bhd (CHHB), however, is seeking shareholders’ approval to launch its Horse Currency — a cryptocurrency that can be exchanged for the company’s products and services — before it has got approval from the SC.

Investing in cryptocurrencies is an extremely risky venture. Many have burnt their fingers buying new coins and tokens during the ICO boom last year. Wouldn’t it be better for CHHB to obtain the SC’s approval before seeking the nod from its shareholders?

Furthermore, judging from the direction CHHB is taking with its token issuance, it resembles other ICOs that have been blocked by the SC.

In CHHB’s case, the company says token holders can someday exchange its Horse Currency for stays at the Palace of Golden Horses, golf memberships, private jet trips, medical treatments and meals at its restaurants, among others.

Buying into an ICO is like purchasing tokens for a funfair that has not yet been built. The issuers are asking investors to acquire their tokens and promising that one day, the digital tokens can be used for the infrastructure that is being planned. But will the funfair become a reality after investors have put their hard-earned money into the scheme?

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