SEC revises rules on initial coin offerings

MANILA, Philippines — The Securities and Exchange Commission (SEC) has revised anew its proposed rules on `initial coin offerings (ICOs), taking into account the comments received from the public last year.

ICO is the cryptocurrency equivalent of an initial public offering. It can be a fundraiser wherein a company looking to create a new coin, app, or service launches an ICO.

The SEC’s proposed rules will now allow issuer opinion that the tokens are security. The rules removed the requirement of having an independent counsel issue the opinion during the initial assessment phase.

The rules also allow amendments to the whitepaper and other documentary requirements initiated by the token issuers during the initial assessment and registration proper phase.

Another amendment in the proposed rules is to allow registration of security tokens by non-resident foreign companies if the security tokens have been registered in another jurisdiction.

However, this will be on the condition that there is an information sharing arrangement in place between the SEC and the competent regulator in the jurisdiction in which the issuer is organized or that the security tokens are registered in another jurisdiction and the issuer provides sufficient proof of such registration and regulatory framework of the jurisdiction.

If these conditions are not met, the foreign issuer will be required to create a branch office in the Philippines.

The rules shall govern the conduct of ICOs wherein convertible security tokens are issued by start-ups that are registered corporations organized in the Philippines or start-ups and corporations organized abroad but are targeting Filipinos, through online platforms.

The SEC had initially targeted to release the rules before the end of 2018 but stakeholders sought for more time to study the rules.

All start ups or corporations organized in the Philippines and duly registered with the SEC that proposes to conduct, or conducted an ICO must submit an initial assessment request with the SEC.

The initial assessment request must include the curriculum vitae as well as police and National Bureau of Investigation (NBI) records of all members of the company or start-up doing the ICO.

It must also include any bankruptcy records, revocation or suspension of membership of any of its team member from any self-regulating organization.

The proposed rules, which aim to protect investors,

Will again be subject to another round of public consultations.