New Diar Report Hightlights Initial Exchange Offerings Are Entering the Asian Market
There have been several countries in Asia that have been attracted to virtual currencies and the crypto market as a whole. One of these nations was South Korea. Nonetheless, in order to control the market and protect investors against scams, the government decided to ban Initial Coin Offerings (ICOs) in 2017.
IEO Continue Expanding In Asia
Clearly, Initial Coin Offerings are banned in South Korea, there is nothing to discuss about it. But exchanges have found a new loophole with the so-called Initial Exchange Offerings (IEO). These IEO are similar to ICOs but have a few different characteristics.
Regulatory agencies in South Korea decided to impose strong Anti Money Laundering (AML) and Know Your Customer (KYC) policies in order to avoid problems in the crypto market. At that time, many Initial Coin Offerings were scamming individuals that placed their funds in these “revolutionary” projects. China has also banned ICOs and trading activities as well.
However, the South Korean cryptocurrency exchange ProBit has launched its fundraising platform in February 2019. Since that moment, the platform was able to raise over $2 million in 20 different IEOs.
One of the main differences with ICOs is the fact that the capital raise concept has been diluted. Developers are searching for smaller amounts of funds. IEOs aim at providing an extra layer of legitimacy to the old ICOs. Since these IEOs are launched on crypto exchanges, the platform has to control that everything looks legit. Moreover, they also conduct KYC and AML procedures for users to purchase these digital assets.
According to Esmond Hwee, Strategic Partnership manager at ProBit, said in a conversation with Diar, that it remains unclear “how sustainable this is.” However, he said that we are in a much better regulatory environment than before.
Furthermore, the cryptocurrency exchange based in China BW.com, explained that although there is a ban imposed by Beijing, they have conducted an IEO aside from their mining operations. This exchange has also been accused of faking its trading volumes. According to a recent report released by Bitwise Asset Management, 95% of the exchanges in CoinMarketCap fake their volumes.