Philippines Eyes Rules for Coin Offerings as Bitcoin Use Surges

(Bloomberg) -- The Philippines is looking at regulating so-called initial coin offerings, as the use of cryptocurrencies gains ground in the Southeast Asian nation.

Bangko Sentral ng Pilipinas Governor Nestor Espenilla said the central bank is in talks with the nation's Securities and Exchange Commission on ways to oversee ICOs, in which companies raise funds through the sale of digital tokens. Companies are seeking to facilitate ICOs and act as a central counterparty for trade in the related tokens to take advantage of the “strong growth potential in this space,” he said in an email.

Read more: A QuickTake Q&A on what an ICO is

The use of bitcoin and its counterparts is rising especially among overseas Filipinos sending money home, as they offer a cheaper and quicker way to move cash. Bangko Sentral estimates remittance transactions using bitcoin are now worth about $6 million a month, three times the volume seen last year.

While that represents a small proportion of the $2 billion or so of funds Filipinos working abroad send home each month, the increasing use of cryptocurrencies has caught the attention of local regulators.

“The SEC is concerned about possible unlicensed investment-taking activity or otherwise selling of investment contracts in the guise of so-called cryptocurrencies via a so-called initial coin offering,” Commissioner Ephyro Amatong said in a mobile text message. 

Bangko Sentral in February asked businesses using digital currencies to register as a remittance company or a money changer, conduct client checks and report suspicious transactions, following through on a pledge a year ago to oversee the industry.  

Digital-currency firms had welcomed that development, Espenilla said. Still, it “does not, in any manner, constitute an endorsement of virtual currency as legal tender, store of value or investment instrument,” he said.

Governments and regulators around the world are seeking to come to terms with how to treat cryptocurrencies as their prices soar to fresh records almost daily, contributing to a surge in ICOs over the past year. Bitcoin, the biggest cryptocurrency by market value, has surged 12-fold this year and recently changed hands at more than $11,000.

To contact the reporter on this story: Siegfrid Alegado in Manila at aalegado1@bloomberg.net.

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Darren Boey, Russell Ward

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