ICO (Initial Coin Offering) is a new way of fundraising in Thailand, now becoming a trend. It is different from the well-known IPO (Initial Public Offering), a fundraising via The Stock Exchange of Thailand (SET), with ICO offering an easier means to obtain investment.
In order to issue an IPO, companies are required to comply with Thailand’s regulatory requirements in terms of business value and continuous growth of revenue.
The regulation of each country is different, thus IPO is limited to only in Thailand. However, ICO trading is much broader, and still being new, thus there are unclear related rules and regulations as yet.
It is widely available throughout the globe. Any business with an interesting project plan could launch ICO since it only requires project whitepaper as a financial prospectus. Moreover, ICO can also be traded by digital coin, which derives from blockchain technology. This technology can collect data from the same computing network. Every single transaction will be recorded and updated to all parties, this can prevent the possibility of counterfeiting since the whole network is holding the same ledger.
Regarding return on investment, IPO investors will be compensated with share dividends while ICO investors can choose different forms of benefit. For example, the investors may either earn company tokens used for product or service discount or earn profit sharing, or dividends, based on company policy.
Under blockchain technology, verification procedures could be applied to ensure its operation, for example customer identification procedure or KYC (Know Your Customer), and laundering protection policy or AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism).
For ICO risks, failure of fundraising for the project could result in the tokens being worthless, or there are other risks in terms of security. No one can guarantee that the possible risks in digital currency will be avoided.
Mr. Thanawat Lertwattanarak, Chief Executive Officer of J. Ventures Co., Ltd. (JVC) stated that blockchain technology helps eliminate the middleman, reduce financial transaction costs, and enhance convenience. Transactions will be transparent and secure since they cannot be deleted once recorded. The technology has enabled ICO fundraising, which created more opportunity and accessibility to a great source of funds, a usage that has gained widespread acceptance at global level. However, investors should be aware of risks and study white papers and token rights clearly.
ICO fundraising is still a brand-new issue in Thailand. The Securities and Exchange Commission (SEC) has already launched a digital asset regulatory framework for ICO and digital currency while many countries are still working on clear control. It will take some time to find out whether it will be popular or not.
A slow start for ICOs in Southeast Asia
Since publication, Thailand saw its first legal ICO, as SE Digital looked to raise between US$65-98 million through virtual currency.
In the data center industry, ICOs have also been used to fund construction of facilities. Golden Fleece in Georgia aimed to raise US$40 million through their ICO to build a green data center, while an American cryptocurrency mining platform listed an ICO to build the ‘largest cloud mining data centers in India and Canada’.
Organisations in the cloud services space have also seen some success in ICO funding. An Australian venture known as Perlin, which looks to provide an alternative to the dominant cloud-computing providers, successfully funded a test version of their product in late-2018.
Telegram, a cloud-based instant messaging service, raised more than US$1.7 billion in digital tokens before the ICO was halted by the Securities and Exchange Commission, as it is alleged that the company failed to register the offering.
Moves towards ICOs are slow in Southeast Asia due to a lack of regulations and uncertain legalities. But it is important to remain aware of new fundraising opportunities, as these could allow for new players to join the competition in the data center and cloud services market.