SEC Releases Rules For ICOs
The Securities and Exchange Commission (SEC) has released proposed rules to govern the registration of initial coin offerings (ICOs), which are usually used by entities to raise funds. Under the draft rules, the SEC said the tokens issued by startups or companies conducting the ICO are considered securities under Section 3.1 of the Securities Regulation Code. These are required to be registered with the Commission and necessary disclosures need to be made for the protection of the investing public.
Despite being analogous to securities, SEC noted that the present registration process for initial public offerings may not be tailor fit for ICOs. Thus, they proposed separate rules for the registration of security tokens. Under the proposed rules, all ICOs conducted within the Philippines or by Philippine startups or corporations shall be required to undergo an initial assessment by submission documents. The SEC shall have 20 days to do its initial assessment and determine whether the tokens are security tokens or not. Startups that will conduct ICOs of security tokens shall also be required to incorporate, and in the case of foreign corporations, will be required to maintain a branch office in the Philippines.
The SEC also announced that the issuers of the security tokens are required to submit, among the other documents, exhibits to the registration statement, a code audit report issued by an independent code auditor, know your customer and anti-money laundering framework, technology risks and security protocols.