The Government of the Philippines is bringing about new regulations on how companies can legally raise funds through initial coin offerings or what we call ICOs.
Furthermore, the country’s Securities and Exchange Commission (SEC) has recently published draft rules governing ICOs and is currently seeking public feedback before they can implement those rules.
The regulations notably assume that tokens issued in all ICOs are securities by default unless the issuers can prove otherwise.
Although most ICOs conducted in the Philippines have argued that their tokens were not securities and should not be governed by the SEC, the regulator claimed it would be “dangerous” to let investors decide on their own especially that most of them don’t really have sufficient resources to identify scams among ICOs, he then continued:
“Therefore, the SEC will put the burden of proving that the tokens issued through an ICO in the hands of the proponents by presuming that the tokens are securities unless proven otherwise.”
According to the aforementioned rules, companies registered in the Philippines and wanting to carry out a token sale would have to provide an initial assessment application to the SEC at least 90 days before the issuance date.
Aside from that, applicants will also have to include a review of the ICO proposal and its credibility, as well as a legal opinion from an independent third party to justify why the token is not a security.
Consequently, the SEC will issue a written report stating its decision regarding the proposed ICO and whether it is effectively a securities issuance or not.
The draft further determines if ICO issuers can pursue with their project as long as they complete a registration process and obtain approval from the regulator before a token sale can start.
All to say that, securities or not, an ICO issuance should definitely go through the SEC to get validated and pursue the sale process, especially if it’s a Philippine one!