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Central bank eyes rules for coin offerings as Bitcoin use surges

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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.

THE PHILIPPINES is looking at regulating so-called initial coin offerings (ICOs), as the use of cryptocurrencies gains ground in the country.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said the central bank is in talks with the Securities and Exchange Commission (SEC) 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 e-mail.

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.

BSP 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 Luis B. Amatong said via text.

BSP 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, Mr. 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. — Bloomberg

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