Self-regulatory organization (SRO) to help enforce regulations, code of conduct

SINGAPORE - Media OutReach - 4 February 2019 - The Philippines, through the Cagayan Economic ZoneAuthority (CEZA), unveils a comprehensiveset of new rules governing cryptocurrencies in a bid to effectively regulateand protect investors.

CEZAhas approved the Digital Asset Token Offering (DATO) regulations that cover theacquisition of crypto assets, including utility and security tokens. Under thenew framework, CEZA is the principal regulating authority. The Asia Blockchainand Crypto Association ("ABACA") is designated as a SRO to helpimplement and enforce the new rules.

"Itis our goal to provide a clear set of rules and guidelines that will fosterinnovation yet ensure proper compliance by actors in the ecosystem. It is ourhope that these set of regulatory innovations will take the digital assetsector one step closer to adoption and acceptance by institutions and thetraditional financial system," said Sec. Raul Lambino, CEZA administrator andchief executive officer.

Underthe rules, all DATOs must have proper offering documents with pertinent detailson the issuer, project, and accompanying advice and certification of expertsand DA Agents. Tokens must be listed on the licensed Offshore Virtual CurrencyExchange (OVCE). Stakeholders must also have confirmed arrangements withaccredited wallet providers and custodians.

Theregulations cover three levels of DATO. Tier 1 involves assets and investmentsnot exceeding $5M with payment made in digital tokens. Tier 2 covers $6M to$10M in investments, while Tier 3 covers investments exceeding $10M.

Utilitytokens, also known as app coins or user tokens, give holders future access tothe products or services offered by a company. Security tokens, meanwhile, arebacked by real assets such as equity, shares of a limited partnership company,or commodities. These are used to pay dividends, share profits, pay interest orinvest in other tokens or assets to generate profits for the token holders.

Thepower of the blockchain and digitization of securities and assets are seen tomake a big impact on the fintech space in the long run. CEZA's new DATO ruleswill provide much needed change to the industry and encourage innovators to usenew technologies responsibly.

"Thesafeguards built into CEZA's rules and system will lead to greater investorprotection and transparency. The involvement of DA agents and experts bring incompetent and neutral third parties into the process to help ensure issuers aretruthful and accurate," Lambino explains.

Lambinosaid CEZA has built an ecosystem of OVCEs where tokens of issuers can belisted. CEZA and ABACA have also approved wallet providers and insured digitalasset custodians to ensure proper storage and governance of investor proceeds.

ABACA,as a newly-appointed SRO, will help the government regulate cryptocurrency companiesby effectively converting industry players into enforcers. The SRO is enforcinga code of conduct among the members and reports to CEZA any breach, violations,or any matters relating to OVCE rules and regulations.

CEZAhas emphasized that collaboration with locator fintech firms and industryplayers will help the government gain insights and keep up to date with innovationson the emerging markets. The economic zone authority is using research onnational and international business standards to efficiently regulate theindustries and licensees under its jurisdiction.

"TheSRO model allows industry players to police its own ranks, while also promotingand protecting the interests of cryptocurrency investors. The rules will remainstringent in assessing the ethics and integrity of companies eyeing to launchDigital Asset Token Offerings" says Ma. Juanita Cueto, Chairperson of ABACA.

"CEZAis moving forward with its goal to develop the economic zone as the center offintech firms in Southeast and Northeast Asia. The economic zone authority hasalready approved and issued provisional principal offshore virtual currencyexchange licenses to 19 companies engaged in the blockchain ecosystemindustries.

AboutABACA

ABACAis a self-regulatory organization (SRO) granted under the authority of theCEZA. ABACA self-regulates the code of ethics and compliance with bestpractices and industry standards for the financial technology firms operatingwithin, or in affiliation with CEZA and ABACA members.