New Digital Token regulation in Malaysia  in 2020 - ICOs out, IEOs in

Securities Commission Malaysia published on 15th January 2020 a new regulatory Guideline on Digital Assets. The guideline outlines a framework for digital token offerings in Malaysia, previously known as ICOs.

This article attempts to summarise the guideline for those who might want to start an ICO in Malaysia.

No more self-run ICOs

First takeaway is that the original model of ICOs, where organisations (now called digital token issuers, per the guideline) raise funds themselves through token sales directly to the public, will be illegal.

Offer tokens via IEOs instead

Instead, token sales must be done via an Initial Exchange Offering (IEO). IEOs can only be run by registered entities that meet the SC requirements as an IEO operator (such as crypto exchanges).

IEO operators are responsible to carry out due diligence and critical assessment on any token issuers before letting them sell their tokens on their platform.

Here are some key aspects of the requirements to register as an IEO operator:

The new guidelines will come into effect after Q2 2020.

Key takeaways

This new development can be viewed in a few different ways:

The positive

The negative

Image by beate bachmann from Pixabay