Philippines issues new rules on acquiring cryptocurrency assets

Self-regulatory organization (SRO) to help enforce regulations, code of conduct

�

SINGAPORE - Media OutReach - 4 February 2019 - The Philippines, through the Cagayan Economic Zone
Authority (CEZA), unveils a comprehensive
set of new rules governing cryptocurrencies in a bid to effectively regulate
and protect investors.

 

CEZA
has approved the Digital Asset Token Offering (DATO) regulations that cover the
acquisition of crypto assets, including utility and security tokens. Under the
new framework, CEZA is the principal regulating authority. The Asia Blockchain
and Crypto Association (“ABACA”) is designated as a SRO to help
implement and enforce the new rules.

 

“It
is our goal to provide a clear set of rules and guidelines that will foster
innovation yet ensure proper compliance by actors in the ecosystem. It is our
hope that these set of regulatory innovations will take the digital asset
sector one step closer to adoption and acceptance by institutions and the
traditional financial system,” said Sec. Raul Lambino, CEZA administrator and
chief executive officer.

 

Under
the rules, all DATOs must have proper offering documents with pertinent details
on the issuer, project, and accompanying advice and certification of experts
and DA Agents. Tokens must be listed on the licensed Offshore Virtual Currency
Exchange (OVCE). Stakeholders must also have confirmed arrangements with
accredited wallet providers and custodians.

 

The
regulations cover three levels of DATO. Tier 1 involves assets and investments
not exceeding $5M with payment made in digital tokens. Tier 2 covers $6M to
$10M in investments, while Tier 3 covers investments exceeding $10M.

 

Utility
tokens, also known as app coins or user tokens, give holders future access to
the products or services offered by a company. Security tokens, meanwhile, are
backed by real assets such as equity, shares of a limited partnership company,
or commodities. These are used to pay dividends, share profits, pay interest or
invest in other tokens or assets to generate profits for the token holders.

 

The
power of the blockchain and digitization of securities and assets are seen to
make a big impact on the fintech space in the long run. CEZA’s new DATO rules
will provide much needed change to the industry and encourage innovators to use
new technologies responsibly.

 

“The
safeguards built into CEZA’s rules and system will lead to greater investor
protection and transparency. The involvement of DA agents and experts bring in
competent and neutral third parties into the process to help ensure issuers are
truthful and accurate,” Lambino explains.

 

Lambino
said CEZA has built an ecosystem of OVCEs where tokens of issuers can be
listed. CEZA and ABACA have also approved wallet providers and insured digital
asset custodians to ensure proper storage and governance of investor proceeds.

 

ABACA,
as a newly-appointed SRO, will help the government regulate cryptocurrency companies
by effectively converting industry players into enforcers. The SRO is enforcing
a code of conduct among the members and reports to CEZA any breach, violations,
or any matters relating to OVCE rules and regulations.

 

CEZA
has emphasized that collaboration with locator fintech firms and industry
players will help the government gain insights and keep up to date with innovations
on the emerging markets. The economic zone authority is using research on
national and international business standards to efficiently regulate the
industries and licensees under its jurisdiction.

 

“The
SRO model allows industry players to police its own ranks, while also promoting
and protecting the interests of cryptocurrency investors. The rules will remain
stringent in assessing the ethics and integrity of companies eyeing to launch
Digital Asset Token Offerings” says Ma. Juanita Cueto, Chairperson of ABACA.

 

“CEZA
is moving forward with its goal to develop the economic zone as the center of
fintech firms in Southeast and Northeast Asia. The economic zone authority has
already approved and issued provisional principal offshore virtual currency
exchange licenses to 19 companies engaged in the blockchain ecosystem
industries.

 

About
ABACA

 

ABACA
is a self-regulatory organization (SRO) granted under the authority of the
CEZA. ABACA self-regulates the code of ethics and compliance with best
practices and industry standards for the financial technology firms operating
within, or in affiliation with CEZA and ABACA members.