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SEC says rules on virtual currency exchanges, ICOs out within 1st half

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THE Securities and Exchange Commission (SEC) is confident it can come out with rules on virtual currency exchanges (VCE) and initial coin offerings (ICO) within the first half of the year, as it looks to regulate the new ways of raising funds.

SEC Commissioner Ephyro Luis B. Amatong answered in the affirmative when asked if they can deliver the guidelines before June, noting that they are in various stages of public consultation for the new rules.

“My commitment to the chairperson is even earlier. We really just weren’t able to focus on it before Christmas,” Mr. Amatong told reporters in Filipino at the SEC’s headquarters in Pasay City earlier this month.

The country’s corporate regulator had recently completed its second round of public consultations for the draft rules on ICOs, which defined them as “distributed ledger technology fund-raising operations involving the issuance of tokens in return for cash, other cryptocurrencies or other assets.”

The proposed rules aim to govern the conduct of ICOs by start-ups or registered corporations in the country, as well as by those based abroad that target Filipinos through online platforms.

Through these guidelines, the commission will determine whether the tokens offered in an ICO are considered as securities. If they are, the tokens will have to be registered with the SEC, thereby giving investors additional protection.

Requirements for companies conducting ICOs include a prospectus containing the corporate background of the issuer, its financial statements, the use of the funds to be generated from the ICO, as well as the risks in participating in the offering, among others.

The SEC started drafting rules for ICOs last year following the increase of local companies conducting such offerings to raise funds from the public.

Meanwhile, Mr. Amatong said they will be releasing the proposed rules for VCEs for public consultation soon. The commission has taken note of existing VCE regulations in other countries such as the United States, Australia, and Switzerland.

Virtual currencies are defined by the Bangko Sentral ng Pilipinas (BSP) as a “type of digital currency created by a community of online users, stored in electronic wallets, and generally transacted online.”

Meanwhile, VCEs are companies or businesses that exchange virtual currency into fiat currency, and vice versa.

The SEC earlier said that they are talking with the BSP for joint cooperative oversight over these type of exchanges.

Together, the rules for VCEs and ICOs are seen to benefit small and medium enterprises in raising funds, as they do not have to go through listing procedures at the Philippine Stock Exchange or the Philippine Dealing and Exchange Corp. — Arra B. Francia