IPO vs ICPO in Hong Kong

An initial public offering (IPO) is the first time a company offers its shares. Shares are sold by the company, not by an investment bank. When a company goes public, it becomes easier for people to buy and sell shares since they are now on a stock exchange. It also means that the company now has to answer shareholders and is subject to more regulations.

What is an ICPO?

An initial coin offering (ICO) is similar to an IPO, but startups offer digital tokens in exchange for money instead of selling shares in a company. These tokens can be used on the startup’s platform or traded on secondary markets.

Why are IPOs and ICOs different in Hong Kong?

In Hong Kong, there is a significant distinction between IPOs and CPOs. An IPO must be registered with the Securities and Futures Commission (SFC), while an ICPO does not have to be registered. 

It is because digital tokens are not considered securities, so they are not subject to the same regulations as shares.

This distinction has caused some companies to bypass the IPO process and go straight to an ICPO. For example, Binance, one of the world’s largest cryptocurrency exchanges, raised $15 million through an ICPO. Other examples include EOS, Telegram, and Filecoin. 

Why are IPOs and ICOs becoming more popular in Hong Kong?

Hong Kong is a well-known financial centre, and many startups want to list their tokens on its stock exchanges. The Hong Kong Stock Exchange (HKEX) and the Growth Enterprise Market (GEM) are two of the most popular places to list digital tokens.

The HKEX has been very supportive of cryptocurrencies; it announced that it would allow companies to list digital tokens as long as they met specific requirements. 

These requirements include submitting a detailed prospectus, complying with anti-money laundering rules, and getting the approval of the SFC.

The GEM is a particular market for young and growing companies. It offers less regulation and lower listing fees than the HKEX. It is a popular choice for startups looking to raise money through an ICPO.

What are the benefits of an IPO?

An IPO offers several benefits, including:

Increased visibility and credibility– A public company is more credible and stable than a private company. It can attract new investors and help the company grow faster.

Increased liquidity– Shares in a public company can be bought and sold on a stock exchange, which means they are easier to trade than shares in a private company. It makes it easier for investors to sell their shares if they need to cash out.

Tax breaks– In many countries, the government offers tax breaks to companies that go public. It helps a company save money and improve its profitability.

What are the benefits of an ICPO?

ICPOs offer several benefits, including:

Increased access to capital– Startups who want to raise money through an ICPO often find it easier than through an IPO. There is less regulation for ICPOs because digital tokens are not considered securities.

Exposure to a new audience– By issuing digital tokens, a startup can reach a new audience of investors who may be interested in using its platform or trading its tokens on secondary markets.

Lower costs– ICPOs tend to be cheaper than IPOs, and less paperwork is involved. It can make it easier for a startup to raise money.

Which is better, an IPO or an ICPO?

It depends on your situation. An IPO can provide you with liquidity and capital gains potential, while an ICPO can provide you with access to new technology and networks. 

Therefore, there is no definite answer when deciding whether an IPO or an ICPO is better. Each option has its benefits and drawbacks.

For example, an IPO offers increased visibility and credibility, while an ICPO offers increased access to capital.

It is essential to consult with a financial advisor to decide which option is best for your company