The Philippine SEC (Security and Exchange Commission) approved draft rules for initial coin offerings (ICOs), ABS CBN News reported. This official approval will pave the way for the legal sale of cryptocurrencies in the Philippines. The Securities and Exchange Commission has released, for public comment, the proposed rules to govern the registration of initial coin offerings, which will be considered when the actual rules will be implemented, SEC Chairman Emilio Aquino said.
Also read: Philippine SEC to Develop Cryptocurrency Regulations
All Entities Embarking on ICOs to Register With the SEC First
In February, news.Bitcoin.com reported that the Philippine SEC was developing a regulatory framework to govern cryptocurrency transactions. At the time, the financial regulator emphasized the need for legislation focused on ICOs in particular. SEC Chairman Emilio Aquino told reporters on August 2, in Manila, regulations will be set for the sale of tokens or cryptocurrencies issued by companies for the purpose of raising funds, the news wire reported.
The SEC stated 12 points in the proposed rules released on August 2. “Under the draft rules, the tokens issued by the startups or companies conducting the ICO may follow the nature of a security under Section 3.1 of the Securities Regulation Code, and therefore, these should be registered with the Commission and necessary disclosures need to be made for the protection of the investing public.” The SEC press release mentioned.
Study of the white papers of various ICOs that have been conducted within the Philippines shows that the proponents of such ICOs claim that the tokens being issued are not securities and are therefore not under the jurisdiction of the SEC, the regulator said. “Allowing this practice is proven dangerous to the investing public who are left with no clear recourse once the said ICOs are proven to be scams. Therefore, the SEC will put the burden of proving that the tokens issued through an ICO in the hands of the proponents by presuming that the tokens are securities unless proven otherwise,” the SEC stated in a press release. “The proposed rules are benchmarked from the rules in various jurisdictions and markets,” it concluded.
“The bottom line is we are looking at whether we would allow retail investors to participate,” Emilio Aquino told reporters on July 30. He also said the SEC requires all entities embarking on ICOs to register with the SEC first, the Philippine Star reported.
Aquino, who was appointed in June, is facing a new regulatory environment with the proliferation of cryptocurrencies, the newspaper outlined. But as former commissioner, he has been at the forefront of the SEC’s crackdown on investment scams. Aquino said the principle of scamming always involves the promise of investment returns that are too good to be true. In tightening the rules on ICOs, the SEC determined that cryptocurrencies are securities because they include an investment contract whereby a person invests his money and is led to expect profits.
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