, the CEO and founder of top , has underscored that exchange-hosted offerings are no less subject to regulatory hurdles than their initial coin offering () predecessors.
The CEO, better known in the industry as “CZ,” made his remarks in an with Bloomberg on April 10.
As previously reported, so-called initial exchange offerings (IEOs) have latterly emerged as an alternative model of offering wherein a centralized crypto exchange acts as a form of underwriter. The exchange generally operates sales and ostensibly vets both the projects themselves and prospective investors.
In the interview, CZ emphasized that while IEOs may indeed offer the benefit of having a third-party do due diligence on projects, regulatory compliance issues are no less onerous for the new model of offering than for ICOs:
“Regulatory compliance does not change regardless of if you do an ICO or IEO. If you issue a representing shares of your company, then it is a security (in most countries), and you need to do some work on compliance.”
He also corrected the narrative that itself spearheaded the concept of an IEO, noting that he is not aware of the roots of the new “IEO” term, and that ’s has not formally presented itself as such. He added:
“Back in 2017 when ICOs were hot, there were other ‘centralized ICO’ websites. We borrowed the idea from there. Exchange-facilitated initial sales is not a new concept. The only minor tweak is using instead of fiat.”
As Cointelegraph has reported, ’s sales platform Launchpad a high-profile for the -based (BTT) this January, by another IEO for AI and smart contract project Fetch.AI in February, as well as for in March.
In mid-March, crypto exchange ’s -based counterpart its first IEO just two days after its announcement. It later conducted a different IEO in April.
Earlier this week, industry critics and advisors in on the potential drawbacks of the IEO trend. One securities lawyer noted that the exchange-hosted model could make regulators even more likely to deem offerings to be securities sales. Others pointed to the paradox of introducing intermediaries to a space that prizes decentralization, as well as criticizing exchanges for allegedly using IEOs as an opportunity to push sales and use of their own native .
Published at Fri, 12 Apr 2019 15:04:06 +0000
