MANILA, Philippines — The Securities and Exchange Commission (SEC) will impose tighter regulations on initial coin offerings (ICOs) to protect investors.
For one, the SEC would look at whether it would allow retail investors to participate in ICOs that would be offered in the Philippines or offered to Filipinos, its chairman Emilio Aquino said in an ambush interview on Friday.
“The bottom line is we are looking at whether we would allow retail investors to participate,” he told reporters.
He also said the SEC requires all entities embarking on ICOs to register with the SEC first.
They may also require setting aside a fund before entities can do their ICOs to prove that they have the capability to go into a business.
“They ask for money but they don’t have a fund. They have to put up a fund first. Eventually, they should also have a platform. We have to look at the platform,” Aquino said, referring to the exchange platform for cryptocurrencies.
In all, the SEC is looking at other regulators on how to deal with these entities that offer crypto currencies.
In the absence of the final regulation, the SEC will stick to the rules governing investment contracts and that these entities must register first with the corporate regulator.
Aquino, who was appointed just last June, is facing a new regulatory environment with the proliferation of crypto currencies.
But as former commissioner, he has been at the forefront of the SEC’s crackdown on investment scams including the various forms of schemes employed by unscrupulous individuals.
Aquino said the principle of scamming has not changed and always involves the promise of investment returns that are too good to be true.
In tightening its grip on ICOs, the SEC determined that crypto currencies are securities because they include an investment contract whereby a person invests his money and is led to expect profits.
Under the Securities Regulation Code (src), companies must first register with the SEC before they can offer securities.
Virtual or crypto currency, which is rapidly becoming popular around the globe, refers to a digital representation of value issued and controlled by its developers. It is becoming more commonly used and accepted all over the world.
An ICO, meanwhile, is the first sale and issuance of a new virtual currency to the public usually for the purpose of raising capital for start-up companies or funding independent projects.