The government of the Philippines has announced that it will issue as many as 25 cryptocurrency exchange licenses in the Cagayan Special Economic Zone (CSEZ). This economic zone, located on the northern tip of the Philippines, is managed by the government-owned and controlled corporation (GOCC), the Cagayan Economic Zone Authority (CEZA).
The purpose of the economic zone is to be a self-sustaining part of the country where commercial industries, recreation and tourism may thrive to attract foreign investments in the area. This move is designed to attract blockchain companies to the region at a time when regulatory uncertainty in the US, Japan and other countries primes such organizations to move to friendlier environments.
Raul L. Lambino, the CEZA Administrator and CEO said that the 25 principal cryptocurrency exchanges that will be issued licenses may have 20 to 30 sub-licenses for traders or brokers. In return, each exchange must invest P53 million ($1 million USD) within two years. He stated, “There are many operating scammers who put an exchange with very little capital and they are victimizing investors. 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.” Presumably, the minimum $1 million investment will keep out the scammers who are looking to make a quick, fraudulent profit. In addition, any ICOs that open up shop in the rehttp://ceza.gov.ph/wp-content/uploads/SLIDER-block-chain-980×380.jpggion will be expected to have their coins “asset-backed.”
One of Lambino’s concerns is that exchanges will list ICO ponzi schemes. From his statements, it appears as though the Philippines will look to regulate these exchanges in order to prevent such possible abuses. In addition, the country is looking to protect its own citizens by preventing them from investing or trading in ICOS by blocking their IP addresses on the exchanges in this zone. This is an interesting approach in that the government of the Philippines is saying that the exchanges are good enough for people in foreign countries, but not for their own people. On the positive side, this may suggest a relaxed regulatory framework, since the country and its people have nothing to lose, and may only gain by hosting these companies.
In addition to developing their businesses in the special economic zone, Lambino recommends that these digital currency exchanges also establish back office support in the Philippines, and register with the country’s Securities and Exchange Commission.
According to Lambino, at least 21 offshore fintech companies have signed memorandums of understanding with the CEZA. With this high level of interest, he hopes to turn the zone into the “Silicon Valley of Asia.” Meanwhile, cryptocurrency companies are fleeing the US regulatory environment to Malta, Singapore and other places.
The real question that remains, is how much of this sector will remain available to grow within the borders of the US once regulators agree on the rules, assuming that they leave enough flexibility for companies to thrive.
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