On 23 March 2022, the Securities Commission Malaysia (“SC”) announced that it has registered 2 initial exchange offering (“IEO”) platform operators, namely Kapital DX Sdn Bhd and Pitch Platforms Sdn Bhd to “promote responsible innovation in the digital assets space”. The registered IEO platform operators will offer eligible businesses in Malaysia an alternative avenue to raise funds via the offering of digital tokens.
Under the IEO regime in Malaysia, an issuer may raise funds up to RM100 million from retail, sophisticated, as well as angel investors, subject to the investment limits provided in the SC’s Guidelines on Digital Assets which came into effect on 28 October 2020. Before hosting the IEO of an issuer on its platform, an IEO platform operator shall be required to critically assess the potential issuers, including carrying out a critical assessment on the potential issuer’s business, the features of the digital token to be offered, and whether such issuer will be able to provide an innovative solution or a meaningful digital value proposition for Malaysia.
The SC has further stated in its announcement that the two IEO platform operators will be given up to 9 months to comply with all regulatory requirements before commencing operations, including the implementation of a robust and effective Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) process to mitigate Money Laundering and Terrorism Financing (ML/TF) risks.
As the application to be registered as an IEO platform operator has closed on 15 February 2021, we now await for SC to announce if they will be opening a second round of applications. Once the 2 IEO platform operators comply with all regulatory requirements imposed by the SC and are allowed to commence operations, we believe the market will anticipate with much enthusiasm the first initial exchange offering of digital tokens to be launched in Malaysia.
For more details, you may refer to the media release issued by the SC here: https://www.sc.com.my/resources/media/media-release/sc-registers-two-initial-exchange-offering-ieo-operators.
