The Philippine Securities and Exchange Commission (SEC) has released a report detailing the country’s proposed initial coin offering (ICO) regulatory guidelines.
The proposed rules would require Philippines-based startups and corporations to file applications with the SEC detailing the function of the tokens and the business operations of the company. Prior to receiving the go-ahead to hold an ICO, companies would be required to submit an initial assessment request that follows the rules of the Commission within 90 days before the beginning of the token pre-sale.
The white paper, including an operations manual detailing the system’s structure, must also be submitted, alongside the evaluation of an independent legal counsel in evidence that the tokens do not meet the requirements necessary to be registered as securities with the SEC. The proposal goes so far as to request source codes and commands in attempts to expose potential scammers.
Further to receiving approval, advisers and members of the company holding the ICO are required to undergo police clearances to show they are of ”good repute“. The report offers nine instances that a team member could disqualify the ICO, including if they are found to have made any false statements regarding the project during the process, or if they have ever been convicted of offenses including embezzlement, misappropriation, or perjury.
To combat any illicit activities of investors in the ICO, know-your-customer and anti-money laundering policies would be required from all participants.
Similarly to the US, the Philippine SEC highlights the importance of registering tokens as securities should they fall within the legal definition. As stated by US SEC Chairman Jay Clayton, tokens fall under the definition of securities if there is a ”reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others“.
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