ICO Regulation Delayed in the Philippines

January 03, 2019 | AtoZ Markets - The Philippines is a country with the fastest growing crypto industry. Currently, governmental financial control authorities are considering introduction of the new rules of cryptocurrency and ICO control. However, the project of the new ICO and crypto market regulations is still in the draft stage.

Interest in Cryptos in the Philippines is Growing

According to the experts, one of the reasons of growing interest in cryptocurrency in Philippines is a large number of Filipinos leaving their homeland. Many Filipinos working and living in other countries, transfer money to relatives who remain in Philippines, so the country's financial watchdog plans to gain firm authority over the market before it gets out of control.

Philippine Government Stays Positive Toward Crypto Industry

Last year in their official statement the Philippine Securities and Exchange Commission (SEC) said that they are ready to publish the final draft of the cryptocurrency and initial coin offerings (ICO) regulations project. According to the independent digital media, in April, the Philippine government decided to approve 10 blockchain and cryptographic companies. In July, there was news that the three cryptocurrency exchanges were granted licenses to operate in the special Cagayan economic zone. Later, the financial regulator published a draft of the ICO regulations project to gain public opinion. As local media reported in August 2018, the law supposed to be published before the end of 2018 on December 31. In the project guidelines, the regulator determined that tokens issued during an ICO could be classified as securities, and "therefore they must be registered with the Commission, and the necessary disclosures must be made to protect the investing public." Earlier, when asked why the organization wants to regulate ICO instead of banning them, as in China, SEC chairman Emil Aquino said in one of the recent interviews that the blockchain technology has its advantages.

SEC put ICO Regulations’ Project on Hold

Recently it became known that the financial regulator of the Philippines decided to postpone the promised publication of official rules regarding the ICO. As the financial authorities explained, they seek to gain more time for consultation with interested parties. Delaying the adoption of the final ICO regulation rules may adversely affect investors in a crypto market. They run the risk of facing a real violation of securities legislation, which in most cases leads to the criminal sanctions for non-compliant companies and their officials. At the moment, the already existing proposed rules have been fully updated and are now open for public comment. The latest offers include the requirement that ICO issuing firms register with the SEC at least 45 days before the date of pre-sale preparation, and also allow the ICO to adhere to the guidelines set out in the securities regulation. According to the draft rules of the financial regulator of the Philippines, ICO "must be registered with the Commission, and the necessary disclosures must be made to protect the investing public." All members of companies promoting ICO are required to disclose resumes, as well as be required to undergo police checks and criminal records, provide information on bankruptcy and membership in self-regulatory organizations. The whitepapers will also become a requirement for listing, along with a description of the project and a “problem it hopes to solve” scheme, proposing a utility requirement besides simply raising capital for promoters. SEC described the new regulations as useful toll for investors that will help to avoid fraudulent ICOs. According to the project summary, there will be made exemptions for private ICOs for closed groups of less than 20 investors, as well as exceptions for banks and financial services institutions, in some circumstances.

It is expected that the new rules will increase the requirements for ICO and therefore their quality standards. Also, according to the regulator, the new regulations will reduce the fraud levels that are currently widespread in space. However, a new project to regulate the crypto market may prove difficult to overcome by many ICO promoters. It remains unclear whether the current rules will be the final version which will be finally approved. But at the moment it seems that uncertainty continues to be the main problem for the ICO and unsuspecting investors in the Philippines.

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