Rules underway for initial coin offerings

SEC targets release within Q1

MANILA, Philippines — The Securities and Exchange Commission (SEC) plans to issue the proposed rules for initial coin offerings (ICOs) within the first half of the year, its top official said.

“We will do our best (to release the rules as soon as possible). We are working on it already,” SEC chairman Emilio Aquino told The STAR.

He said regulators are hoping to have the rules in place within the first quarter or if not, in the first half of the year.

What is certain, he said, is that it is imperative to have the rules in place as soon as possible because there are already a number of entities that have expressed interest in issuing coins.

“There a lot of companies that want to issue,” he said.

But Aquino said the SEC cannot rush the release of the coins as it is still incorporating comments from stakeholders.

“We got a lot of comments. We are incorporating these comments,” he said.

The SEC chief said the rules are meant to encourage the proper use of technology.

“It is not about regulating technology but it is about preventing bad behavior,” Aquino said.

The SEC has revised anew its proposed rules for ICOs, taking into account 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.

As part of the revisions, the SEC’s proposed rules would now allow an issuer to provide its 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 proposed rules also allow amendments to the whitepaper and other documentary requirements initiated by the token issuers during the initial assessment and registration proper phase.

Furthermore, it required that the latest updated version of the whitepaper be made available to the target market.

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.

Aquino said this amendment is meant to cover foreign companies that want to issue coins in the country.

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, according to the SEC rules.

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 said 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.