When Initial Coin Offerings (ICOs) boomed in 2017, few believed it would later run out of steam in the second half of 2018, leading some industry observers to opine that the apparent ICO boom was in fact a bubble waiting to burst. Nonetheless, ICO is but a part of the crypto market, albeit a predominant one. As widespread fraud and scams propagated by bad actors through malicious ICOs gave the crypto industry a bad name, there was a palpable need to restore investor confidence in the industry. As the saying goes, “necessity is the mother of invention,” and in its hour of need, the crypto industry created the Initial Exchange Offering (IEO) to restore its market integrity.
In essence, IEO aims to leverage on the credibility of cryptocurrency exchanges, which are responsible for undertaking the necessary due diligence screenings of token offerings hosted on its platform, thereby advocating their legitimacy though not necessarily their profitability. Based on statistics released by crypto market intelligence firm Inwara, there have been more than 100 IEOs in this year alone, with Singapore playing host to 28 of them, positioning itself as the global leader in the IEO market. The United States comes in at a distant second, with 11 IEOs hosted this year.
It is fair to say that in addition to being a global financial hub, Singapore has also become a global crypto hub. Accordingly, it is worth diving into the development of the local IEO market of this highly-progressive city-state, which is leading the way for its Southeast Asian (SEA) peers.
Having raised about US$188 million from the 28 IEOs undertaken within its shores, Singapore will soon be playing host to Binance — the world’s largest cryptocurrency exchange by trading volume which had in July this year expanded its operations to the city-state with the launch of its fiat-crypto conversion platform in the country. Given Singapore’s popularity as a host country for IEOs, it may be not too long before the operations of the Binance Launchpad, which provides hosting facilities for IEOs, are expanded to the country as well.
Regardless of whether the Binance Launchpad reaches the shores of Singapore, the country already has its own IEO platform in the form of Huobi Prime. In March this year, Huobi Prime hosted its first IEO, the TOP token issued by TOP Network, which is the world’s first decentralized open communication network powered by next-generation blockchain i.e. version 4.0 of the technology. Two months down the road, Huobi took things further, launching Huobi Prime Lite. Huobi Prime Lite offers higher transaction speed and greater investment flexibility, with the ThunderCore’s Thunder Tokens (TT) the first IEO to be hosted on the platform.
Given the booming IEO landscape in Singapore, it may be fruitful to dissect the conditions of the country’s economic, financial, technological, and regulatory domains to explore what precisely are the factors that give Singapore an edge when it comes to IEOs. From the outset, Singapore’s open economy, which has consistently been rated as among the most pro-business and corruption-free in the world, provides a firm foundation that instills confidence among crypto market players, particularly IEO token issuers. Additionally, the strong fundamentals of Singapore’s well-established financial sector, which have been recognized by the International Monetary Fund (IMF) as among the best in the world, provides much-needed stability to mitigate volatility in the local crypto market.
Similarly, the growth of the local crypto industry is also inherently tied to the level of technological development in the country, as the industry requires technological support, primarily in relation to blockchain. In this regard, Singapore is known for actively embracing digital technologies. Case in point: the use of blockchain for the financial payment and capital investment domains via the Monetary Authority of Singapore (MAS)’s Project Ubin. Project Ubin adopts an industry collaborative approach to explore the use of blockchain for the clearance and settlement of payments and securities.
Last but not least, Singapore’s tempered approach to regulating its local crypto industry through the “Guide on Digital Token Offerings” issued by the MAS provides legal certainty, while ensuring regulatory flexibility. This is because the Guide sets out a comprehensive explanation of the manner in which securities laws apply to local crypto market players, while leaving the door open to the possibility of further amendments being made to fit the changing conditions of the rapidly evolving crypto industry.
All in all, it is clear that Singapore has seized the global IEO mantle and is leading the way for SEA in cryptocurrencies. Given the prowess of Singapore’s crypto industry, SEA countries would do well to note the manner in which the various dimensions of a country’s economic, financial, technological, and legal sectors play a collective role in determining the rise or fall of the local crypto market.
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