Changpeng Zhao, the CEO and founder of top crypto exchange Binance, has underscored that exchange-hosted token offerings are no less subject to regulatory hurdles than their initial coin offering (ICO) predecessors.
As previously reported, so-called initial exchange offerings (IEOs) have latterly emerged as an alternative model of token 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 token 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 Binance itself spearheaded the concept of an IEO, noting that he is not aware of the roots of the new “IEO” term, and that Binance’s Launchpad has not formally presented itself as such. He added: