A Philippine special economic zone on its northernmost tip will allow initial coin offerings for blockchain projects, but they have to be backed with tangible assets to prevent fraud.
This was disclosed by Secretary Raul Lambino administrator and chief executive officer Cagayan Economic Zone Authority (CEZA) on the sidelines of the Global Blockchain Summit held in Pasay City over the weekend.
He stated:
"If they have ICO we will have to find out if their ICO is asset-backed because this what we are saying that there are many scammers. If they offer in the market their initial [digital] coin, they may be able to convince 50 unsuspecting investors and promise them the sun and the moon. This is the Ponzi scheme. We are not going to allow it.”
Ponzi scheme is an investment scam that promises clients with huge return using funds contributed by new investors to pay off purported returns to existing investors.
Lambino made the statement as he also announced he would limit the number of cryptocurrency exchanges to 25, and between 20 and 30 sub-licenses for traders and brokers.
Although CEZA will only issue 25 licenses, each exchange will have 20 to 30 sub-licenses for traders and brokers, the IPA chief noted.
"Many operating scammers put an exchange with very little capital and they are victimizing investors," he said.
Lambino said that “no one will be allowed to invest or trade in the ICOs by blocking the Internet Protocol or IP addresses of the exchanges,” as part of a security protocol to protect the public against possible fraud.
"We do not want the Philippines to be a haven for scammers even if these scams are happening abroad. That's why through our probity and integrity check we can determine if their transactions are just designed to entice unsuspecting people to invest in Bitcoin or whatever crypto coin that is a fraud," he added.
At the same time, Lambino disclosed that CEZA’s investment promotion agency (IPA) is in the process of crafting regulations that will protect those investing in cryptocurrency.
CEZA is eyeing to become a hub for financial technology (fintech) investments.
CEZA, he said, would remain stringent in checking the honesty and integrity of companies eyeing to launch ICO)in the country. These companies shall be registered with CEZA.
He added that each crypto exchange would be required to invest at least $1 million or around within two years and it must have a back office in the Philippines. Firms must also be registered with the Securities and Exchange Commission.
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