Philippines Announces The New Cryptocurrency Regulatory Framework

• Toshendra Kumar Sharma
• February 12, 2019

It was Bitcoin that had laid the foundation for a new era of digital money transaction. 2009 when the world saw Bitcoin surfacing, it was the same year when we got to know about Blockchain that was the underlying technology of Bitcoin and other cryptocurrencies. The Blockchain is that new kid in the town which has taken the world by storm. Being a decade old, this technology has carved a niche for itself and has disrupted almost all the business verticals. From healthcare to finance to supply chain management, Blockchain finds application everywhere.

Despite paving the way to one of the biggest revolutions, Bitcoin and cryptocurrencies got surrounded with apprehensions. People still doubt its longevity and sustainability in the future. Many believe that there is little probability that cryptocurrencies will not have a secure future. The primary reason for this is cryptocurrencies lack regulation. There is no governing authority which controls the flow of cryptocurrency transaction. Thus, making its usage doubtful.

What is the reason that cryptocurrencies are not gaining global acceptance?

Although we have seen the rise in the use of Blockchain application when it comes to cryptocurrencies, then it has not become as popular as cryptocurrencies, and the reason for accounting for the same is lack of regulatory authorities. Since there is no governing body, cryptocurrencies can be put to use to illicit activities. Apart from this, anonymity associated with cryptocurrencies further adds to the list of reasons which makes it vulnerable. In case of fraud, it would be difficult to find out the responsible person, since there is no ruling body, whom to contact becomes a matter of concern.

So, what should be done?

Undoubtedly, cryptocurrencies have paved the way for a new era of financial revolution, and it has made the transaction, faster and easier. Despite all this, the lack of regulation makes it doubtful. With the help of regulatory authorities, cryptocurrencies will have more regulation, thus garnering the trust of individuals and investors.

Many nations and companies have shown an inclination towards digital currencies. ICOs have also become very popular and an excellent way for investors to invest in the market. The Philippines is the latest addition to the list of nations that are promoting the use of cryptocurrencies and has introduced a regulatory framework for the same.

 

What is the news?

The Philippines recently announced the formation of new regulations and regulatory authority that will govern crypto assets. It has introduced a new set of rules ruling Digital Asset Token Offering (DATO). As per the Cagayan Economic Zone Authority (Ceza), this new regulatory framework will cover the acquisition of cryptocurrencies which includes utility and security tokens. With this division, the authorities aim to safeguard the interest of the cryptocurrency investors and at the same time promoting the concept and usage of cryptocurrencies.

 

What does this transformation entail?

As per the new regulation passed by the Philippines, all the DATOs should have proper documentation related to cryptocurrencies. These documents will have all the details pertaining to cryptocurrencies, issuer, project, certificate of experts, accompanying advice. The token must be listed on the licensed Offshore Virtual Currency Exchange (OVCE).

As per the new set of regulations, the investment in digital tokens will be divided into three tiers that represent the range of investment. Here is how the division will look like:

1. One tier will include investments, and assets is not more than $5 million
2. The second tier will range between $6-$10 million
3. Third ties will have investments above $10 million

This press release, however, doesn’t mention anything about ICO as it was expected. As per the Philippines Securities and Exchange Commission (PSEC), there needs to be regulation on ICOs so that it becomes a secured platform for those who are willing to invest cryptocurrencies. PSEC issues an ICO regulating documents in August 2018. As per them any agency who is ready to run an ICO or selling ICO tokens to Filipinos must submit an Initial Assessment Request to the regulating authority who will cross-verify the token security.

This step by the Philippines showcases growing inclination of nations towards cryptocurrencies and its strong future. With regulations coming in, cryptocurrencies will become more secure and will have credibility, thus luring companies and startups to participate in ICO or bring inventiveness in this division. At the same time, it will pave the gateway for new developments.

Conclusion

Cryptocurrencies are often considered as a bubble that will soon burst, it is because of this reason that investors are hesitant to full-fledged invest in ICOs. With regulations coming in and formulation of governing authorities, a favorable ecosystem of growth for the investors will be created. Moreover, these regulations will also ensure that digital currencies are not utilized for illicit activities, and enhancing the credibility of cryptocurrencies and ICOs.