SEC defers issuance of final rules on ICOs

MANILA, Philippines — The Securities and Exchange Commission (SEC) is still not ready to issue its final rules on initial coin offerings (ICOs), which it was hoping to release before the end of 2018.

This after the different shareholders asked for more time to study the draft ICO rules.

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

The SEC has revised anew the proposed ICO rules, taking into consideration the inputs of the different shareholders.

According to the latest draft rules which are awaiting public comments, ICOs must be registered with the SEC 45 days before the pre-sale date.

Under the draft rules, the SEC said the tokens issued by the startups or companies conducting the ICO may follow the nature of a security under Section 3.1 of the Securities Regulation Code.

“Therefore, these should be registered with the Commission and necessary disclosures need to be made for the protection of the investing public,” it said.

All start ups or corporations organized in the Philippines and duly registered with the SEC that proposes to conduct, or have 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.

Furthermore, the SEC said it must include a description of the ICO project and problems in the Philippine market that the “ICO aims to solve.”

Issuers must also provide the Whitepaper which will include the description of the offering, its risks, as well as advantages and disadvantages.

However, the SEC also listed exemptions to the rules.

One exemption is the sale of security tokens by an issuer to fewer than 20 persons in the Philippines during any 12 month period.

Another exemption is the sale to banks, investment houses, insurance companies, and pension funds.

The SEC said the rules aim to protect investors.

Asked why the Philippine SEC has decided to regulate ICOs instead of imposing a total ban as what China did, SEC chairperson Emil Aquino said technology has its benefits.