In Thailand, where the stock exchange has been established for 43 years, companies can raise funds based on future growth through an IPO, a property fund or an infrastructure fund.
The latest development involves raising funds in the traditional capital market on the basis of a cult of personality or stardom.
With the advent of new digital and blockchain technologies disrupting every business boundary, using celebrities' popularity to raise funds or issue digital tokens via an initial coin offering (ICO) has become a tactic on the Global Crypto Offering Exchange (GCOX).
Tokenising popularity
"Celebrities have their own brand and value, but they cannot capitalise on their reputations and value through IPOs," said Wirunya Kokasemsook, chief executive of Wealth Symphony, a financial planning and investment consultant company. "Therefore we are transforming celebrity reputations into asset [capitalisation] by issuing celebrity tokens [tokenisation] and trading them on the crypto exchange."
Founded in early 2017 as the brainchild of several venture capitalists and prominent Singaporean public figures, GCOX aims to spearhead the way popularity is monetised, according to the white paper.
ICOs see a company, usually a tech startup, issue digital tokens, typically in exchange for a cryptocurrency such as bitcoin or ethereum.
Tokens can be used to buy future services from the issuer or can be sold, ostensibly to reap a handsome return.
ICO transactions are similar to crowdfunding, whereby the issuer presents a business model to investors, but the key differences are in that the raised funds are in the form of digital currencies using blockchain technology and the deals are enforced using smart contracts.
Wealth Symphony holds the right to operate GCOX, a platform that uses blockchain technology to create and trade celebrity tokens in Thailand and invest in crypto exchange through private placement, Ms Wirunya said.
To help celebrities capitalise on their images, GCOX offers four business solutions for them, including a crypto exchange platform that uses blockchain technology for trade and transactions.
Ms Wirunya points to the example of Manny Pacquiao, the renowned Filipino boxer and senator, who will create his own "Pacquiao coin" for his fans and Filipinos to use at hotels and restaurants or even to pay for airline tickets through merchants that Mr Pacquiao has transaction agreements with.
"This is called 'celebreneur', another business where GCOX provides a platform that allows celebrities to conduct transactions of goods and services for their existing businesses," she said.
The celebrities can develop closer relationships with their fans through direct engagements such as birthday greeting video or pay-per-view live streams with virtual gifts via the "celeb-connect" platform.
Celebrities who want to increase awareness for a particular cause, inspire action for a good deed, crowdfund for community projects or even promote philanthropic work can also do these activities via "celeb-charities" for their fans.
According to the white paper, the utilisation of these celebrity tokens depends on the potential and promise of particular celebrities, the size of the community or fan base on the platform, the degree of user activity and market acceptance, as well as the participants' choice of potential projects.
Each celebrity token can be utilised within the framework of each token. If holders of celebrity tokens want to cash their tokens, they must trade these tokens for an "Acclaim token" (ACM), which serves as a medium of exchange for the many celebrity tokens on the Acclaim blockchain platform.
"ACM is like the US dollar, which many countries quote as a base currency of exchange, while the Pacquiao and [ex-footballer Michael] Owen tokens are currencies for fans [to use and exchange]," Ms Wirunya said.
She said GCOX is only looking to form partners and build brand awareness, but does not engage in any promotions in Thailand as the company plans to focus on business in China, South Korea and the Philippines, where business potentials are more tangible.
Utility tokens
GCOX plans to raise 1 billion tokens in total to support its digital platform, with 400 million tokens are allocated to private placement, in which Ms Wirunya will invest in personally, and the remaining 600 million will be offered to the public, with three offering rounds at the price of $0.60 (19.78 baht), $0.90 cents and $1.2, respectively.
ACM and celebrity tokens can be used in three countries: the United Arab Emirates, where the token is said to be an investment tool that complies with Islamic principles; Estonia; and the Philippines, where Mr Pacquiao can use his political muscle to push for legislation that promotes utility tokens.
There are three types of ICOs: asset-backed, securities-backed and utility. Utility tokens let investors purchase a company's products or services; asset tokens enable investors to acquire rights in assets such as bullion or properties; and securities tokens allow investors to obtain rights in revenue- or profit-sharing without engaging in day-to-day operations.
Despite a business model based on the fame and fortune of celebrities for business value, not all celebrities are selected by GCOX.
"We will select celebrities that have vision, existing businesses and special sentiment among fans," Ms Wirunya said. "For example, Mr Owen plans to open a football school in China and he will raise funds for this project, without government support, from his celebrity tokens. [The utility feature of the tokens] allows his fans to use the 'Owen tokens' to join this school."
About 20 celebrities have signed agreements to raise funds via celebrity tokens.
Trusted parties
Piriya Sambandaraksa, managing director of Chaloke Dot Com, a club for the technical investment analysis community, said the tokenisation of personality bears interest in that personality can be tokenised as an asset.
But if the concept is too centralised, this won't differ from the existing system, Mr Piriya said.
One of the weaknesses of many ICOs and tokenisation is that they still require a "trusted party" involved in the working process and a "third party" to assign the book value of tokens, he said.
Previous ICO projects involved the tokenisation of real-world assets. The link between real-world assets and digital tokens also requires a third party to prove reliability.
"These are the differences [between digital tokens and] cryptocurrencies. The latter has no linkage because bitcoin is not backed up by any physical currency and it can operate independently," Mr Piriya said. "Having a trusted party means decentralisation is worthless because centralisation is tantamount to having the means to manipulate."
Understanding needed
Securities and Exchange Commission (SEC) secretary-general Rapee Sucharitakul reiterated that investment in cryptocurrencies and ICOs is for a niche market that has good knowledge and understanding of new technologies, apart from an obsession with technological developments.
Basic investment knowledge, such as in stocks, is not adequate: ICO investors must be tech-savvy individuals who understand technology, are able to comprehend the ICO white paper and can analyse project feasibility to gauge whether the ICO has a viable business model or not.
Mr Rapee said more than 90% of ICOs have failed, but most investors don't know this because the niche market is dominated by institutional investors who have a huge trove of funds.
"Institutional investors have enough funds to diversify their investments into high-risk assets and receive returns from less than 10% of ICOs to compensate for failed ICO deals," Mr Rapee said. "But general investors do not have such huge amounts of money to diversify their investments."
There is no authorised digital asset exchange, nor brokers and dealers of digital assets, since the SEC is still in the process of assessing applicants' qualifications to operate businesses involved with digital asset trade and transactions.
The six businesses seeking licences to operate as digital asset exchanges are Bitcoin Co Ltd (bx.in.th); Bitkub Online Co Ltd (bitkub.com); Cash2Coins Co Ltd (cash2coins.com); Satang Corporation Co Ltd (tdax.com); Coin Asset Co Ltd (coinasset.co.th); and Southeast Asia Digital Exchange Co Ltd (seadex.io).
The two businesses seeking licences to operate as digital asset dealers are Coins TH Co (coins.co.th) and Digital Coin Co Ltd (thaiwm.com).
While the SEC assesses the applications, these businesses are allowed to operate because they submitted their requests within 90 days after the royal decree on digital asset businesses took effect on May 14.
The new legislation was enacted to regulate digital asset offerings and businesses undertaking digital asset-related activities.
Pursuant to the royal decree, digital assets cover cryptocurrencies, digital tokens and any other electronic data unit, as specified by the SEC.
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