Cover Story: Another leg-up fordigital assets

Local investors are a step closer to accessing a new breed of digital tokens issued by local start-ups and early-stage companies.

On Oct 28, the Securities Commission Malaysia’s (SC) revised Guidelines on Digital Assets came into force and applications were open for licences to operate initial exchange offering (IEO) platforms. The guidelines were issued on Jan 15 this year. According to industry players, there has been keen interest to participate in the new investment space.

IEO operators play a similar role to investment banks, in that they will act as the adviser, book runner and underwriter for start-ups and companies that wish to raise up to RM100 million (in 12 months) for innovative blockchain projects through the issuance of digital tokens. These tokens are defined as “securities” by the SC.

An increasing number of listed companies are moving into the blockchain and digital token space, and these include MyEG Services Bhd and AirAsia Group Bhd. In 2018, MyEG inked a memorandum of understanding — via its associate company in the Philippines, I-Pay MyEG Philippines Inc — with Cagayan Economic Zone Authority, to operate a payment gateway for cryptocurrency exchanges in the country.

Tan Sri Tony Fernandes, co-founder and CEO of AirAsia Group, announced in 2017 that he wanted to turn frequent flyer points into a cryptocurrency (or digital token) known as BigCoin. But there have been no updates regarding the initiative.

In Malaysia, two out of the three digital asset exchange (DAX) operators — entities licensed by the SC to operate an electronic platform for the trading of digital tokens (bitcoin, ether, litecoin and ripple) — have expressed their interest in applying for IEO operator licences.

Equity crowdfunding platform pitchIN will also apply for a licence, according to Kashminder Singh, its co-founder and chief strategy officer.

Edmund Yong, co-founder of boutique blockchain consultancy firm Celebrus Advisory, says various technology start-ups and companies have been enquiring about becoming an IEO operator recently.