News Regulation

Philippines will allow asset-backed ICOs

A Philippine special economic zone on its northernmost tip will allow initial coin offerings (ICOs) for blockchain projects, but they have to be backed with tangible assets to prevent fraud.

This was disclosed by Raul Lambino, administrator and chief executive officer Cagayan Economic Zone Authority (CEZA) during the Global Blockchain Summit held in Pasay City over the weekend.

“If they have ICO we will have to find out if their ICO is asset-backed because this what we are saying that there are many scammers. If they offer in the market their initial [digital] coin, they may be able to convince 50 unsuspecting investors and promise them the sun and the moon. This is the Ponzi scheme. We are not going to allow it”, – he said.

Lambino also announced he would limit the number of cryptocurrency exchanges to 25.

Although CEZA will only issue 25 licenses, each exchange will have 20 to 30 sub-licenses for traders and brokers.

According to Lambino, “no one will be allowed to invest or trade in the ICOs by blocking the Internet Protocol or IP addresses of the exchanges,” as part of a security protocol to protect the public against possible fraud.

“We do not want the Philippines to be a haven for scammers even if these scams are happening abroad. That’s why through our probity and integrity check we can determine if their transactions are just designed to entice unsuspecting people to invest in Bitcoin or whatever crypto coin that is a fraud”, – he added.

CEZA is seeking to become a hub for financial technology (fintech) investments.

Lambino said that CEZA would remain stringent in checking the honesty and integrity of companies eyeing to launch ICO)in the country. These companies shall be registered with CEZA.

He added that each crypto exchange would be required to invest at least $1 million or around within two years and it must have a back office in the Philippines. Companies must also be registered with the Securities and Exchange Commission (SEC).