Countries all over the world are either already regulating cryptocurrencies or are in the works of it. As for the Philippines, the national watchdog-SEC-is in the works of it. On Thursday this government agency released what they propose to be the new set of rules that will govern ICOs. These proposals have been put out to the public and will be open to the public of whom the SEC expects feedback from before they can put them in effect. One notable proposal is the SEC’s disregard of whether an ICO is a security or not. If the proposal is to be passed, all ICOs will be regarded as securities and will fall under the body’s regulations unless they can prove otherwise.
All ICOs Are Securities Unless Proven Otherwise, Says The Philippines
Initial Coin Offering (ICOs) allow startups to raise money to fund their projects through selling in-house currencies-Cryptocurrency. This sort of ‘crowdfunding’ has worked for many startups and has seen off hundreds of companies successfully fund some of the most brilliant blockchain based ideas, however, it has also been one of the easiest ways for scammers to steal money from naïve investors. Posing as real companies with actual projects-but, giving out little to no information about their project- scammers have made away with billions of dollars of investor’s money, something that has remained a major problem in the industry.
By effectively classifying an ICO as a security, the company launching the ICO will have to provide a lot of information about the company members, their involvement, the company project, how much they intend to raise and how they intend to use the money. So naturally, not a lot of companies want to give out this much information and definitely not the fraudulent ones. So, in many countries like the U.S, the market’s watchdog has had to classify every startup on an individual level, sorting the securities from the ‘not’ securities. Given that this will take a long time and at times some companies will pass by under the radar, the Philippines’ SEC has proposed that all ICOs are classified as securities and they have to be governed by the agencies set of rules. This proposal that was announced on Thursday will be open to the public to give their feedback and if they find it to their liking, every ICO will effectively be classified as a security in the country.
According to the SEC’s reasoning, they feel that it would be dangerous to let investors choose between what is and what is not a security especially because many investors do not have the resources to distinguish. So, to protect investors from fraudulent ICO’s and scams, the SEC will govern and regulate every ICO in the country and do the ‘dirty’ work for investors. In a press conference, the SEC continued to explain that they (startups) could, however, prove otherwise meaning that companies could argue as not securities having followed the agencies guidelines.
Under the new guidelines, companies that wish to launch an ICO will have to submit an initial assessment application at least 90 days before the launch date and the application must be detailed. On top of the normal company and project details, the members will further have to provide their names, ages, and resumes.
As countries continue to adjust to the reality that cryptocurrencies are here to stay, it seems the Philippines has taken a rather stunning one.