According to a press release published by the Asia Blockchain and Crypto Association (ABACA) on February 4, the government of the Philippines, via the Cagayan Economic Zone Authority (CEZA), has laid out a framework to guide the operations of digital assets and Initial Coin Offerings (ICOs).
The Digital Asset Token Offering (DATO)
Called the Digital Asset Token Offering (DATO) regulations, this law will require crypto developers running an ICO project to provide detailed documentation on their projects, including issuers, accompanying advice the certification of experts.
The framework also makes room for the creation of a licensed Offshore Virtual Currency Exchange (OVCE), a unique exchange set up for listing developed tokens. Also, all participants in these projects are required to set up accounts with CEZA-accredited wallet providers and custodians to protect investor’s funds.
DATA regulatory framework breaks down digital asset offerings into three distinct levels.
The first level, dubbed “tier one,” covers assets and investment projects that will have crypto payments with values no more than $5 million. Under tier two, we have digital tokens whose value ranges from $6 million to $10 million, while investments and projects exceeding the $10 million mark are included in tier three.
Speaking on the DATO regulations, Raul Lambino, Chief Executive Officer at CEZA claimed that they were made to help protect cryptocurrency investors and also help promote the development of innovation in the nascent industry.
“We aim to provide a clear set of rules and guidelines that will boost innovation while also ensuring proper compliance by actors in the ecosystem. We hope that these set of regulatory innovations will promote blockchain and crypto adoption by institutional investors and the financial system.”
In its bid to help develop an economic zone powered by FinTech, CEZA has given almost 20 companies to approval to operate cryptocurrency exchanges in the country. The body further indicated that the DATO rules would provide the proper encouragement for cryptocurrency investors to apply new technologies responsibly.
Enabling Market for ICOs
The development of the DATO regulations takes the Philippines a step closer to enacting crypto ICO legislations. In September 2018, the Philippine Securities and Exchange Commission (PSEC) was reported to be in the process of unveiling draft crypto regulations.
The country’s financial watchdog wants to position the Asian nation as an enabling market for the emerging FinTech sector, and the draft was reportedly in response to calls from lawmakers to develop a structured regulatory environment for the country’s crypto sector.
However, the PSEC announced in January that it was going to postpone the unveiling of the ICO draft regulations back, attributing the delay to its desire to examine the regulations for more clarity.
The draft will require that every firm looking to conduct an ICO must register with the PSEC at least 45 days before the commencement of the pre-sale of the ICO.
Also, all ICOs that are held by firms in the Philippines- whether owned by citizens of the country or just based there- will be assessed by the PSEC to determine their status as security tokens.
In addition, companies registered with the PSEC that are aiming to conduct ICOs are required to submit assessment requests with the SEC. The application must include the police and National Bureau of Investigation records and curriculum vitae of all members of the company.
Also, the request must include a proper description of the project, as well as the market problems that the project is looking to solve. The PSEC had initially planned to unveil the final ICO draft sometime last year, but it confirmed that it would be pushing the launch back. The new date for the launch has yet to be confirmed.