The Philippine market regulator, the Securities and Exchange Commission (SEC) on Thursday released its draft rules on Initial Coin Offerings (ICOs) to regulate cryptocurrencies or digital tokens trading.
“Despite being analogous to securities, the present registration process for initial public offering [IPO] may not be tailor fit for the initial coin offering. Hence, the proposed rules have been formulated for the registration of security tokens offered through initial coin offerings,” the SEC said.
The regulator said the proposed rules shall primarily govern the conduct of ICOs, where startups issue convertible security tokens and registered corporations organized in the Philippines, as well as companies that want to sell their platform to local investors.
At the same time, the SEC is seeking feedback from banks, investment houses, the investing public and all interested parties before finalizing the rules.
The domestic blockchain community reacted swiftly to the proposed regulations, with members of the Philippine Association for Digital Commerce and Decentralized Industries (PADCDI) welcoming the latest development.
"I think the draft looks good. It clearly indicates the requirements and qualifications of an ICO. The SEC has really thought this through. If this becomes official, expect to have a rise of ICOs from traditional businesses after two years,” James Florentino, CEO of MergeCommit Inc. told Cryptovest.
Three other members of PADCDI sent their comments:
Magellan Fetalino, "I have to say, so far, I like what I'm reading in the SEC Guidelines for ICOs."
John Ilagan, "So far, they're actually quite reasonable. Quite a few more necessary submissions than what we originally laid out as a group, but still fair to both security and non-security issuers."
Mark Vernon, "Looks straightforward and good for us as a crowdfunding platform, as an escrow agent."
The proposed regulation pointed out that any company that will conduct an ICO has to register with the SEC and to undergo an initial assessment. The initial assessment will also determine if the tokens being offered are not security tokens. The Commission said it would act on the request for the evaluation 20 days after receipt of the document.
“In case the Commission classifies the token as security tokens in accordance with these rules and the principal office of the issuer is located outside the Philippines, the issuer must establish a branch office within Philippine jurisdiction,” the SEC added.
During the second PADCDI general assembly in May, SEC Commissioner Ephyro Luis Amatong called on industry players to send their inputs to the agency as he asked the group to assist the government in creating an ‘appropriate rule’ for the space.