This article first appeared in The Edge Financial Daily on October 4, 2018

KUALA LUMPUR: Country Heights Holdings Bhd (CHHB) has assured shareholders it will be taking “very patient and prudent steps” in its plan to conduct an initial coin offering (ICO), amid the Securities Commission Malaysia’s (SC) strict stance on the controversial method of fundraising.

“As this is a very new field in the country, and with CHHB being the first public listed company to come up with such an initiative, this may be very sensitive to those who do not understand blockchain technology and are confused about too many cryptocurrencies,” it said in a filing with Bursa Malaysia yesterday.

Tycoon Tan Sri Lee Kim Yew, who is CHHB founder and chairman, has proposed to issue one billion units of Horse Currencies, backed by RM2 billion worth of the group’s assets, with an initial 300 million units of Horse Currencies open for circulation to the public.

The group intends to seek the support of and endorsement from the shareholders to embark on the ICO at its extraordinary general meeting (EGM) on Nov 8.

Once the board of directors has decided to proceed with the ICO, the group will then seek the shareholders’ approval and convene another general meeting for the final endorsement for the launching of the ICO, its structure, mechanism and the exchange centre which will be used.

At the EGM, CHHB also plans to get shareholders’ nod to appoint technology partners and other external consultants for the proposed ICO.

“These consultants will prepare all the necessary documentation for submission and engagement with the relevant authorities for approval, if any. As there is no regulation specifically regulating this, [Lee] wishes for the relevant authorities to be kept well informed of the group’s initiative,” said CHHB.

Investors’ concern is not unwarranted. This is not the first time that Lee is proposing a new investment product. In 2007, he had come up with the country’s first oil palm farm-sharing scheme to ride the then-booming crude palm oil prices — which averaged RM2,400 per tonne.

Under the Country Heights Growers Scheme, 36,000 plots of 0.25ha each were offered to the public for subscription and they were fully taken up. The scheme saw an early termination due to its low yields but not before it created an uproar among its investors back in 2013.

Meanwhile, the SC has not budged from its strict stance against ICOs and has previously warned that the offering of digital tokens in exchange for any form of payment may trigger regulatory requirements under securities laws.

The regulator also said no party is permitted to carry out any regulated activities such as fundraising, fund management and dealing in capital market products without obtaining necessary approval from the SC.

The SC had also shot down a number of ICOs including the LaVida Coin backed by Datuk Seri Dr Hasmida Othman — better known as Datuk Seri Vida — and the Singapore-based CopyCash Foundation’s issuance of CopyCashCoin.

This time around, to ensure there are no hiccups to the proposed ICO, CHHB said it will set up a chair with a local university to educate and promote the importance of blockchain technology for the future of this country.

“[Lee] believes that one of the benefits of the blockchain technology, besides reducing cost, is that it is regarded as a trusted machine of integrity as there is no room for corruption or money laundering,” it said.

“[He] believes that blockchain technology is also in tandem with Islamic values as it does not charge interest, which is not permitted under Islamic values. Through blockchain technology, CHHB will share the potential business benefit with the currency holders,” added the group.

If the group’s bid for an ICO goes through, the currency will be used as a utility token which can be exchanged for products and services under the company, including stays at the Palace of the Golden Horses, restaurants, golf memberships, private jet trips and medical treatments, according to a previous filing.

Country Heights closed up two sen or 1.43% at RM1.42 yesterday, giving a market capitalisation of RM388.45 million.