MANILA – The Securities and Exchange Commission (SEC) has released recently their new revised rules on Initial Coin Offerings or ICOs, amid increasing interest from stakeholders and cryptocurrency holders and enthusiasts. The revised rules added new definitions, and both increased and removed reportorial and financial requirements for ICO entities.
Yesterday, the SEC addressed this in a statement, stating that the revised rules were released after public consultations done last year, which ended on November 30. The revised rules would affect start-ups or corporations registered in the Philippines, conducting ICOs targeting Filipinos, only though online platforms. ICOs meanwhile are defined as the issuance of distributed ledger tokens in return for cash, in order to raise money from the general public, which in turn could be sold at a gain, give voting rights or usage rights.
While most of the draft rules remain unchanged, the SEC has added and removed some provisions regarding reportorial requirements. (Here is our critique of the revised rules: The Dangers of Over-regulating Philippines ICOs)
Most changes happened on controversial provisions of ICO prospectus. Interested parties believe that the prospectus requirement is burdensome and too stringent. One change the SEC has made is the removal of the requirement of ICO member to show proof of financial capability as part of the prospectus. But, the issuer must still submit numerous requirements, like KYC/AMLA compliance, Operations Manuals, Whitepaper and risk and security protocols among others. Also, the SEC has added a requirement of submitting interim financial statements if the ICO company has been in operation for more than 1 year. Interim financial statements should also be provided if the prospectus is filed more than 135 days from issuance of audited financial statements.
An entire chapter was also added regarding Escrow Agents, their functions, obligations and duties.
To see the full revised rules, here’s the link.
The SEC is inviting more interested parties to submit comments and inputs on the revised ICO rules by January 15, hopefully for discussion on the next round of public consultation on the ICO rules.