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Initial Exchange Offering: Guidelines On Digital Assets

An Initial Exchange Offering (IEO) is a fundraising method where digital tokens (or coins) are issued to investors on a cryptocurrency exchange platform. This process is facilitated by digital asset exchanges (DAX), which acts as an intermediary between the project team and potential investors.

The Guidelines on Digital Assets was issued by the Securities Commission Malaysia (SC) on 28 October 2020 and revised on 19 December 2022. The Guidelines set out the requirements relating to fundraising activity through digital token offering, operationalisation of IEO platform and provision of digital asset custody and is applicable to the following parties:

(i)All issuers seeking to raise funds through digital token offering.

(ii)All persons intending to operate an IEO platform.

(iii)All persons intending to provide the services of safekeeping, storing, holding or maintaining custody of digital assets for the account of another person.

Requirements For An Issuer Undertaking IEO

An issuer is defined under the Guidelines as “a body corporate that seeks to raise fund through a digital token offering”. The Guidelines requires the issuer to:

(i)Be a company incorporated in Malaysia (excluding an exempt private company and public-listed company) or limited liability partnership (LLP).

(ii)Have its main business operations carried out in Malaysia.

(iii)Only raise fund through IEO and not through any other means.

(iv)Have a minimum paid-up capital of RM500,000 and minimum shareholders’ fund of RM500,000 maintained at all times if it is a company.

(v)Have a minimum capital of RM500,000 maintained at all times if is an LLP.

(vi)At all times, have at least two directors on the board of the issuer whose principal or only place of residence is in Malaysia.

(vii)Ensure that its directors and senior management are fit and proper persons.

Application To Raise Fund Through IEO

An issuer is required to submit an application accompanied with a “white paper“ to an IEO operator for an approval, in the form and manner as prescribed by the relevant IEO operator.

A “white paper” is defined under the Guidelines as the document issued by the issuer accompanying an IEO describing, among others, the detailed information of the issuer, the IEO and the IEO project, and includes a supplementary white paper. Further details of the content requirements in relation to the application can be found at paragraphs 8.03 and 8.04 of the Guidelines.

In its application, the issuer must demonstrate to the IEO operator that the IEO project provides an innovative solution or a meaningful digital value proposition for Malaysia.

Fundraising Limits

The maximum funds an issuer can raise by way of IEO is subject to the following limit:

The issuer must also demonstrate to the IEO operator whom the issuer is submitting to, that the gross proceeds to be raised from the IEO would be sufficient to undertake the IEO project as proposed in the white paper.

Investment Limits

The limits a person may invest in an IEO are as follows:

(i)For sophisticated investors: no restriction on investment amount.

(ii)For angel investors: a maximum of RM500,000 within a 12-month period.

(iii)For retail investors: a maximum of RM2,000 per issuer with a total investment limit not exceeding RM20,000 within a 12-month period.

Sophisticated investors refer to investor specified under Part I of Schedules 6 and 7 of the Capital Markets and Services Act 2007, which is broadly categorised as accredited investors, high-net worth entities and high-net worth individuals.


The development of guidelines and regulations surrounding digital assets and IEOs in Malaysia reflects the country’s readiness to embrace the emergence of cryptocurrency, fintech and such non-traditional method of fund raising. That being said, it is imperative to have a sound regulatory framework to ensure that scams or fraud can be properly vetted to instil market and investor confidence.

7 September 2023


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