As per a press release by the Asia Blockchain and Crypto Association (ABACA) on 4th February, the “fintech city,” Philippines’ has issued a new series of rules and regulations related to governing of the Digital Asset Token Offering (DATO).
Cagayan Economic Zone Authority (CEZA) has approved the recent introduction of regulations which have been specifically designed to control the cryptocurrency industry and protect the interests of investors that would cover matters on the acquisition of crypto assets, utility and security tokens. Under the new regulation, the CEZA would be the governing authority.
Per the release, all DATOs must abide with the new rules which include having all the necessary offering documents with the required description on the issuer as well as on the project followed with additional advice and certification from experts and DA agents. Further, Tokens must also be listed on the licensed Offshore Virtual Currency Exchange (OVCE). Stakeholders are also required to establish confirmed engagements with accredited wallet providers and custodians.
The rules are categorized into different tiers, in which every tier has their own restriction limit. Tier one speaks of condition that digital tokens are available for those whose investments and assets do not exceed $5 million, tier two covers the range of $6 – $10 million, and tier three relates to investments and assets more than $10 million.
Raul Lambino, CEZA administrator and Chief Executive Officer, in his comments with respect to the recent introduction of the framework, stated: “It is our goal to provide a clear set of rules and guidelines that will foster innovation yet ensure proper compliance by actors in the ecosystem. It is our hope that these set of regulatory innovations will take the digital asset sector one step closer to adoption and acceptance by institutions and the traditional financial system.”
CEZA believes that the execution of the new series of rules and regulations would deliver a great amount of change with respect to the fintech and blockchain industries and also motivate the innovators to utilize the recent technologies effectively. CEZA has described in a statement that, “Utility tokens, also known as app coins or user tokens, give holders future access to the products or services offered by a company. Security tokens, meanwhile, are backed by real assets such as equity, shares of a limited partnership company, or commodities. These are used to pay dividends, share profits, pay interest or invest in other tokens or assets to generate profits for the token holders,”
Lambino further stated that CEZA has created a network of Virtual Currency Exchange in which tokens pertaining to issuers would be listed. Also, both CEZA and the association has permitted wallet providers and insured digital asset custodians to make sure about the efficient storage and governance of investor proceeds.
He said, “The safeguards built into CEZA’s rules and the system will lead to greater investor protection and transparency, The involvement of DA agents and experts bring in two competent and neutral third parties into the process to help ensure issuers are truthful and accurate.”
The Asia Blockchain and Crypto Association (“ABACA”) which is a newly appointed SRO to assist in implementing and imposing the new rules, would also support the government in regulating the cryptocurrency companies by efficiently converting industry players into enforcers. The SRO would provide a code of conduct for the members and in any case, if the conduct requirements do not meet the specified criteria, the same would be reported to CEZA with details about the breach and violations.
Ma. Juanita Cueto, The Chairperson of ABACA, stated that “The SRO model allows industry players to police its own ranks, while also promoting and protecting the interests of cryptocurrency investors. The rules will remain stringent in assessing the ethics and integrity of companies eyeing to launch Digital Asset Token Offerings.”
Further adding “CEZA is moving forward with its goal to develop the economic zone as the center of fintech firms in Southeast and Northeast Asia. The economic zone authority has already approved and issued provisional principal offshore virtual currency exchange licenses to 19 companies engaged in the blockchain ecosystem industries.”
CEZA has highlighted that the association with the locator fintech firms and industry players would help the government to gain views on the latest improvements in the field of developing markets and will the government in being updated on them. The economic zone authority is deploying research work on national and international business standards to efficiently control the industries and licensees under its jurisdiction.