Affirming the nation’s philosophy that technology can benefit the public when used appropriately, Philippine regulators said they were reluctant to issue an outright ban on initial coin offerings (ICOs), which have become a popular capital-raising vehicle among fintech startups.
Speaking to reporters at a press conference, Securities and Exchange Commission (SEC) Commissioner Emilio Aquino said the agency was looking at ICOs and their potential public benefits. However, Aquino stated the government would chase after companies or individuals abusing the scheme and selling unregistered securities.
He stated: “We’re believers in technology, too, but at the same time, it’s not technology but the bad behavior of people taking advantage of the technology that we want to look at. If it will really help start-ups, why not?”
Aquino made the statement following the cease-and-desist order (CDO) issued to stop the ongoing ICO of Krops, an online farm produce marketplace managed and owned by Joseph Calata. The CDO also covers affiliates of Calata Corp, including Black Cell Technology Inc, Black Cell Technology Ltd, and Black Sands Capital.
Krops was targeted after the SEC found its ICO illegal because it mirrors the nature of a security as defined by Section 3.1 of the Securities Regulation Code (SRC), which stipulates that such securities should be subject to registration and strict disclosure rules.
At the same time, Aquino disclosed that a new ICO framework is under review by the market regulator to make it distinct from the upcoming framework on crowdfunding. However, the SEC upholds that ICOs that qualify as securities must follow existing rules on registration before being sold to the public.
Currently, the Philippines is considering whether to allow ICOs for distribution only to “accredited” investors, or qualified individuals who have the “necessary” knowledge to understand the platform.
“As it is now, small and big investors don’t understand it. Some people with a certain level of financial literacy will understand, in that sense, it’s possible that we can give exemptive relief (from registration). We’re looking at that,” Aquino went on to say
The Philippines is considered a cryptocurrency-friendly jurisdiction, an observation shared by the blockchain industry. Indeed, Manila’s hosting of the inaugural Blockchain & Bitcoin Conference is a testament to this.
Event organizer Smile-Expo said it chose the Philippines to host the first in the series of conferences in recognition of Manila’s pioneering efforts in digital asset regulations. The Philippines is the first country in Asia to address the growing demand in the digital currency space.