The new regulations cover the acquisition of crypto assets, including utility and security tokens, as well as issuer requirements relating to registration, security and investor protection.
CEZA (Cagayan Economic Zone Authority), the Philippines’ offshore special economic zone’s regulatory body, has unveiled a comprehensive set of new rules governing cryptocurrencies in a bid to effectively regulate the sector and protect investors.
“It is our goal to provide a clear set of rules and guidelines that will foster innovation yet ensure proper compliance by actors in the ecosystem,” said CEZA chief Raul Lambino. “It is our hope that these set of regulatory innovations will take the digital asset sector one step closer to adoption and acceptance by institutions and the traditional financial system.”
The DATO (Digital Asset and Token Offering) regulations cover the acquisition of crypto assets, including utility and security tokens. They also cover the registration and certification of DATOs; their classification; the measures and considerations for their evaluation; security principles; investor protection measures; and enforcement procedures.
Under the framework, CEZA is the principal regulating authority, and the ABACA (Asia Blockchain and Crypto Association) is designated as a SRO (self-regulatory organisation) to help implement and enforce the new rules and code of conduct.
The new rules classify DATOs into three tiers according to the amount of funds they seek to raise. Tier 1 (not exceeding USD 5 million) and Tier 2 (not exceeding USD 10 million) DATOs whose issuers do not voluntarily apply for SRO certification need only comply with basic submission, publication and registration requirements.
Tier 2 and Tier 3 (exceeding USD 10 million) DATOs whose issuers voluntarily apply for SRO certification are required to also possess agreements with OVCEs (Offshore Virtual Currency Exchanges), wallet providers and custodians. They must also make arrangements for listing and custodianship and appoint an SRO-accredited DA Agent.
The primary role of the DA Agent is to advise and guide the DATO issuer in its compliance obligations, and to liaise with CEZA and the SRO including when there are reasonable suspicions of a breach by the issuer.
For registration, DATOs must have proper offering documents with pertinent details on the issuer, project, and accompanying advice and certification of experts and DA agents. Tokens can only be listed on a licensed OVCE.
Last month, CEZA authorised the first OVCE, known as CEZEX, which allows users to trade fiat and cryptocurrencies, security tokens, and derivatives including CFDs and commodities.
CEZEX is backed by digital asset exchange operator Pinnacle Digital, Singapore fintech investment firm IPE Global, the Phnom Penh Derivatives Exchange and Softbank-affiliated venture capital fund SB Kaikaku Fund.