Cryptocurrency for Country Heights?

On Friday, 21 September 2018, the Chairman of Country Heights Holdings Bhd announced he wants his company to do an initial coin offering (ICO). The “Horse” currency as he calls it, is asset-based. Country Heights intends to issue 1 billion Horse currency backed by RM2 billion in the company’s assets.

There are several points for clarification:

·       Will SC and BNM approve this new ICO issue or will it proceed without the approvals?

·       Presumably Country Heights wants to exchange the Horse currency for real currency like the Ringgit for various reasons – will this contravene any Exchange Control issues?

·       In a blockchain environment, how are the assets secured for investors? Is there a trustee? And on whose direction does the trustee operate – do the investors (of the ICO) have a say?

·       What will the assets be used for? To be collateral in any winding-up procedure?

·       Is there an information memorandum issued and tabled for the EGM on 8 November 2018?

·       What qualifies for an ICO – any private, public entity can avail itself?

·       How long is the implementation exercise anticipated?

·       Is there any dilution of existing shareholders? And who ranks higher? Presumably, the ICO investors since it is asset-backed.

It is an interesting idea but it by-passes the banking system and the regulated capital markets. How will authorities respond?