Special economic zone in the north of Philippines - the country that converts around $40 million of cryptocurrency per month, will start allowing the creation of asset-backed ICOs – initial coin offerings for the blockchain-based projects. Through this initiative, the government looks to combat fraud and Ponzi schemes according to Secretary Raul Lambino, the chief executive officer of Cagayan Economic Zone Authority (CEZA) announced on the sidelines of the Global Blockchain Summit held in Pasay City.
"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.” – said Raul Lambino
Ponzi scheme or pyramid scheme is a type of an investment fraud that uses funds contributed by new investors to pay off the promised earlier huge returns to those who signed on previously. Recently what was dubbed as the Turkish ‘national’ cryptocurrency Turcoin was revealed as the Ponzi scheme.
The regulator also shared the plans for CEZA’s investment promotion agency (IPA) to create new regulations that will protect cryptocurrency investors.
Lambino has announced that the number of operating crypto exchanges in the country will be limited to just 25, as CEZA is planning to issue only 25 licenses. However, each exchange will have 20 to 30 sub-licenses for traders and brokers, the IPA chief added. To be officially recognized as crypto exchange an investment of at least $1 million within the first two years will be needed. The exchange will also need to be registered with Securities and Exchange Commission (SEC), as well as to have a company office also located in the Philippines.
"Many operating scammers put an exchange with very little capital and they are victimizing investors … no one will be allowed to invest or trade in the ICOs by blocking the Internet Protocol or IP addresses of the exchanges,” Lambino said when talking about protecting the investors funds.
CEZA is eyeing to become a hub for financial technology (fintech) investments. The authority has also added that it would remain stringent in checking the honesty and integrity of companies eyeing to launch ICO in the country when they register with the body.
By Nadya Astam