Filipinos have been biting their nails the past few days as the Securities and Exchange Commission (SEC) ponders its conditions for ICOs in the country. The SEC has reportedly been in recent talks with local cryptocurrency companies including Satoshi Citadel Industries (SCI) and Coins.ph before coming up with the draft.
Finally, today, the SEC has released a 37-page document outlining its proposed rules for local ICOs. According to the memorandum, any entities planning to conduct initial coin offerings must file applications to the SEC and include detailed documents outlining their operations and how their tokens function.
“All start-ups and/or corporations organized in the Philippines and/or duly registered with the Commission who proposes an ICO, and start-ups and/or corporations conducting or who will conduct an ICO targeting Filipinos must submit an initial assessment request including the attachments required under these Rules to the Commission in the form and manner directed under these rules not later than ninety days before the start of the pre-sale period,” the SEC wrote.
All ICO team members and advisors are also required to submit themselves to NBI and police clearances as proof of “good repute.” They are also required to submit a whitepaper containing an Operations manual with the system architecture, pay the application fees, and submit an assessment by an independent legal counsel attesting that the tokens do not qualify as securities. In the case that a token qualifies as a security, they must be registered as such with the SEC.
And as is already standard in many parts of the world, KYC/AML frameworks must be established. The company must also submit a code audit report by an independent code auditor, and must also submit an annual audit of their financial statements.
The SEC also proposes requiring “documentations and the corresponding source codes and commands, including detailed flowcharts of the process.” This should be enough to scare off scammers who have no intent to actually deliver a working product, but it’s unclear whether the SEC will be tapping on blockchain development experts to actually audit submitted codes. This would be ideal, seeing as it would be futile to attempt to screen code and detect gibberish unless a trained eye will be looking.
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