SEC targets to release ICO rules later this year
THE Securities and Exchange Commission (SEC) is optimistic it can come out with the guidelines for initial coin offerings (ICO) this year as it hopes to regulate the number of businesses using this method to raise money.
SEC Chairperson Emilio B. Aquino earlier said they will release the approved rules and regulations for ICOs within the second quarter, but noted they encountered other problems that caused the delay.
“We want that out already because these are additional products. But at the same time ang concern namin (our concern is), some of the scams here are saying they are into crypto and all that. They’re just adding additional problems,” Mr. Aquino told reporters in a recent media event.
Mr. Aquino added that the commission was unable to focus on the draft as it resolved to go after Kapa Community Ministry International, Inc., one of the country’s largest investment scams that has raked in at least P50 billion in investments from the public.
“But we are there, we want it out soonest. It has to be this year,” Mr. Aquino said.
The move to regulate ICOs is part of the SEC’s efforts to protect investors who may otherwise be taken advantage of by investment scams disguised as start-ups offering tokens.
So far, the commission has already subjected the proposed ICO guidelines to two rounds of consultations, in November 2018 and last January.
The SEC defines ICOs as a “distributed ledger technology fund-raising operations involving the issuance of tokens in return for cash, other cryptocurrencies, or other assets.”
Through ICOs, companies issue coins or tokens to the general public for the purpose of raising money. Tokenholders may then collect gains through profits or an increase in the value of tokens if the start-up is successful. They may also be given voting or governance rights and usage rights, among others.
The proposed guidelines state that companies must file an initial assessment request with the commission before conducting an ICO to let the SEC determine whether the tokens to be issued are securities or not.
If deemed as a security, the company will then have to submit a white paper containing “relevant, complete, and timely information regarding the ICO project which are understandable to users with reasonable knowledge on blockchain technology.”
These details include the use of funds to be generated from the sale of the ICO tokens, a description of the currency, cryptocurrency, or other assets that will be received as payment for the tokens, and the risks in investing, among others.
The SEC earlier said it will issue the ICO rules alongside the release of guidelines for virtual currency exchanges (VCEs), or companies that exchange virtual currency to fiat currency, and vice versa.
Draft rules on VCEs however have yet to be released.
“We’re also getting updates from most jurisdictions. Sa Australia may code of conduct. Mas mahigpit pa sila (They are stricter) compared to the government, so we’d like to adopt their model,” Mr. Aquino said. — Arra B. Francia
