Tuesday 30 July 2019 4:37 pm

What chance do Initial Exchange Offerings stand against the SEC?

As American Psycho would probably say, Initial Exchange Offerings are akin to Dorsia – currently the trendiest restaurant in town that everyone is trying to get a table at. While Initial Coin Offerings (ICO’s) had the title in 2017, authorities soon caught up in the latter half of 2018 and subjected them to a ‘crypto token framework’ that ultimately obliterated its growth due to the heavy compliance it demanded. This year saw the emergence of IEO’s, an allegedly ‘new and improved’ fundraising system promising more due diligence, transparency and security for investors and consumers. With the Securities and Exchange Commission (SEC) already investigating them, will they create the next fundraising boom or will they too be ratted out as financial products?

Fundamentally akin to an ICO, the advantage of an IEO is that it is facilitated by an exchange or launch pad acting as a third party intermediary to the transaction. Developers create the project’s tokens and upload them to an exchange where they can be purchased by individuals. An exchange is responsible not only for the sales process for each token, but for inspecting projects submitted to them for legitimacy through audits, technical assessments and analysis of the token’s potential.