MANILA -- The Philippine securities regulator on Monday said virtual currency regulations are in the works after it shot down the country's first coin offering last week.
Commissioner Emilio Aquino of the Philippines' Securities and Exchange Commission said the agency is engaging its U.S. and Australian counterparts to sharpen the policies on cryptocurrencies. The Philippine SEC hopes to come up with regulations "within the year," he told reporters.
The regulations, which are still in the "drafting stage," may require accreditation for cryptocurrency owners and investors based, for instance, on net worth or the level of financial literacy, Aquino said.
Other countries, including China and South Korea, have moved to crack down on cryptocurrencies, while others, such as Indonesia, have issued stern warnings.
The Philippines, however, has kept "an open mind" for virtual currencies because the underlying technology could reduce the cost of financial transactions, such as remittances, Aquino said. The Philippine central bank has accredited at least two bitcoin exchanges.
The $25 billion-plus annual remittances from the Philippines' 10 million overseas workers are seen as an econimic lifeline for the $300-billion economy.
The Philippines' accommodating attitude comes even as it stopped the first initial coin offering last week for not seeking a clearance from regulators.
The SEC on Jan. 23 issued a cease-and-desist order against Black Cell Technology Inc., Black Sands Capital Inc., Black Cell Technology Ltd. and Krops, which are selling Krop Tokens and KropCoins, which the regulators said are tokenized shares.
Black Cell Technology Inc. is a subsidiary of Black Sands Capital Inc., and Black Cell Technology Ltd. is incorporated and registered in Hong Kong, according to the SEC's order.
Those three companies, as well as Krops, are linked with businessman Joseph Calata, whose agricultural company Calata Corp. was delisted from the Philippine Stock Exchange last year due to multiple disclosure violations.
Calata last year said minority stockholders from the delisted company could convert their shares into virtual currencies, something that did not sit well with many shareholders who wanted to be bought out at a fair price.
According to an undated letter on its website, Krops said it has already sold 2.4 million coins out of 6.4 million offered coins since its recent launch.
While there are no specific rules yet covering cryptocurrencies in the Philippines, the coins are considered as "investment contracts," which are a form of securities and should be registered with the SEC, Aquino said.
The SEC is investigating other coin offerings and has also received inquiries for such offers, Aquino said, declining to elaborate. He added that Calata's group could proceed with its offer if it complies with the SEC's requirements for selling securities.
"We are not here to stop the technology altogether," Aquino said. "We are trying to address bad behavior."