Draft rules were formed based on international experience and published for public discussion before adoption. The SEC of the Philippines invites banks, investment funds, crypto community and other sides that want to get involved to submit remarks on suggested regulation until August 31.
Based on the document, new rules will consider all tokens issued via ICO as securities, unless otherwise proven. It also determines the rules for filing an application at least 90 days before the ICO launch. The SEC proposes to evaluate ICO in two stages: initial assessment and registration.
The first stage will provide an opportunity for ICO supporters to argue against labeling tokens as securities. The preliminary assessment will last for 20 days during which the commission has to determine the status of coins offered for placement. If it finds that the proposed ICO tokens should be classified as securities, the initiator is required to proceed with the registration.
When registering, ICO holder will have to provide personal data: name, address, contact details and a CV describing his professional background for the last 5 years. The document will also include campaign schedule, target market, and potential risks of undergoing an ICO.
The issuer will still need to produce an audit report performed by an independent expert. It should include, in particular, results of source code testing, technological risks and security protocols.
The ICOs held by fewer than twenty private investors can skip the procedure. Large institutional participants are also not obliged to fill in the forms.
WHY IS IT IMPORTANT?
1. The rules presented are still a project. The main goal of the document is to clear the industry from scammers.
2. The SEC of the Philippines is consistently fulfilling its promise to adopt regulatory framework given at the beginning of the year. This year, the Philippines central bank recognized Bitcoin as a legal payment instrument. In January, the SEC urged investors to be cautious about participating in ICO. A few months later, the country decided to license 10 crypto companies that will be allowed to work in a special economic zone with a preferential tax regime, an amount now raised to 25.
3. In April, the regulator recognized contracts for cloud-based mining as securities