The Cagayan Economic Zone Authority in the Philippines is drafting cryptocurrency regulations that will allow a maximum of 25 cryptocurrency companies to receive licenses to operate, although each company will be able to issue 20 to 30 sub-licenses for traders and brokers. These companies will be able to act as cryptocurrency exchanges, mine cryptocurrency, or conduct initial coin offerings (ICOs). Sixty cryptocurrency companies have already applied for licenses, so the selection process is expected to be highly competitive.
The Cagayan Economic Zone Authority controls the Cagayan Special Economic Zone in the Philippines, which sits at a major international shipping lanes crossroads in the Pacific. It is a strategic location between the Pacific and the West Philippine Sea. The zone offers lower taxes than the rest of the Philippines in order to boost employment and trade and this could be quite beneficial for cryptocurrency companies.
The primary purpose of the regulations will be to protect cryptocurrency investors. The Cagayan Economic Zone Authority will be especially strict on ICOs and will be determining whether they are backed by assets and legitimate. The CEO and administrator of the zone, Raul Lambino, says:
“There are many operating scammers who set up an exchange with very little capital and they are victimizing investors… We do not want the Philippines to be a haven for scammers even if these scams are happening abroad.”
Cryptocurrency companies that receive licenses to operate in the Cagayan Special Economic Zone will be required to invest PHP 53 million ( USD 1 million) within two years to stimulate the economy of the zone. Additionally, the companies will be required to have an office in the Philippines and must be registered with the Philippines Securities and Exchange Commission.
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