Two more coin offerings in the works
Big booster Korn says to expect further ICOs
Two more non-listed companies will seek to raise funds through an initial coin offering soon, following in the footsteps of J Ventures’ plan to issue an ICO in March, says former Finance Minister Korn Chatikavanij.
Mr Korn, who is chairman of the Thai Fintech Association, refrained from elaborating on specific details and did not provide any names.
Jaymart subsidiary J Ventures hopes to acquire 660 million baht in the first phase of the 100-million-coin ICO, with a price of US$0.20 (6.40 baht) per coin. Plans call for using the raised funds to develop a decentralised digital lending platform integrated with blockchain technology.
Mr Korn is part of Jaymart’s advisory team for JFin coin development.
His comment resonates with remarks by a source working in the domestic cryptocurrency industry who said there will likely be two or three ICOs this year initiated by Thai-owned companies.
An ICO needs no location, as investors only need smartphones and the internet to trade, the source said.
ICOs are an unregulated means of crowdfunding that use cryptocurrency as a source of capital. The main difference between an ICO and an initial public offering (IPO) — the traditional fund-raising choice for many decades — is that an ICO uses digital currency as capital, while an IPO uses real currency.
ICOs provide an avenue for companies to raise funds quickly, unencumbered by the hefty regulations and waiting periods of a traditional IPO. Unfortunately, investor protection mechanisms established by IPO regulations may also disappear in ICOs.
Mr Korn said J Ventures will scout for potential buyers of its ICO among the ICO community.
J Ventures has been in talks with the Securities and Exchange Commission (SEC) for around six months on its ICO offering, he said.
“As long as an [ICO] fund-raising is not interpreted as a securities [offering], then there would not be any problem because such fund-raising would not fall under the regulatory framework,” he said.
The SEC’s approach towards ICO regulation is supportive, Mr Korn said, as the market regulator views this fund-raising channel as a useful technology, while reiterating certain risks associated with ICO.
Mr Korn compared trading of cryptocurrencies to the stock market, whereby some investors view the stock market as a gamble and speculate on share price movement, while others consider the bourse as a place for investment.
Establishing a good ICO standard to differentiate between a fraudulent ICO and a legitimate ICO with actual investment projects is an approach to reduce investment risks for investors, he said.
The SEC has extended a public hearing to regulate ICOs to Jan 22, saying it will help related stakeholders take part in the public hearing process. So far, the SEC has stipulated that the maximum investment for retail investors is capped at 300,000 baht per ICO project, with a total investment sum of 3 million baht per person.
Mr Korn personally views cryptocurrencies as an asset rather than a currency, because using bitcoin to purchase goods is not as convenient as currencies deemed legal tender by authorities.
The US dollar is controlled by the US Federal Reserve, compared with bitcoin, which has clear algorithm rules and stable mechanism whereby the amount of bitcoin does not exceed 21 million bitcoins, Mr Korn said.
But investors are concerned about bitcoin because it has no inherent fair price and there is no asset that can act as collateral for bitcoin, while e-wallet hacking remains a risk, he said.