In April, Raul Lambino, chief of the Cagayan Economic Zone Authority (CEZA), announced that the Philippine government-owned economic zone its opening its doors to blockchain and cryptocurrency companies. At the time, Lambino said they will be building a financial services technology hub at the Cagayan Special Economic Zone, which will house at least 10 crypto startups. That number has since grown two-fold.
Last week, Lambino confirmed that CEZA is “crafting regulations that will protect those investing in cryptocurrency,” the Philippine News Agency. The investment promotion agency also plans to limit the issuance of its licenses to 25, although each license holder can have 20-30 sub-licenses for traders and brokers.
Each crypto operator will be required to invest at least $1 million over a two-year period, pay up to $100,000 in license fees, have a back office in the Philippines, and register with the Philippine Securities and Exchange Commission (SEC). In exchange, the companies will get tax breaks from the Philippine government.
The CEZA chief said they will check “the probity and integrity of companies” coming into the country, particularly those who plan to launch an initial coin offering (ICO).
“If they have ICO we will have to find if their ICO is asset-backed because this [is] 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,” Lambino said, noting that they plan on “blocking the Internet Protocol or IP addresses of the exchanges” to protect local investors against possible fraud.
Aside from ICO, the companies can also offer cryptocurrency mining exchange services, but crypto-fiat and fiat-crypto transactions must be done outside the country “to avoid infringing Philippine regulations.” Previously, Lambino said an initial group of operators, mostly Japanese, Hong Kong, Malaysian and Korean companies, have already signalled their interest in the CEZA licenses.
CEZA manages the special economic zone, which has always been noted for innovative business concepts like a freeport. Now, the agency is setting its sights on becoming a hub for fintech investments, one that protects its 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,” Lambino said.