In its proposed rules, PSEC stated that all tokens issued through ICOs are to be presumed securities unless the issuer proves otherwise.
The Memorandum highlights the importance of registering security tokens and specifies that the company will have to submit an application to the authorities more than 90 days prior to “start of the pre-sale period.” The application requires various pieces of information such as: a detailed description of the project including the token distribution plan; certification of incorporation; the CV of all team members including photographs; NBI clearances, and the proposed whitepaper. More importantly, it also requires an independent third party legal opinion that will need to explain why the token is not considered a security. Other proposed rules include the requirement that staff within the ICO possess necessary qualifications. Furthermore, if the token issuer is a foreign corporation, it will have to create a branch office in the Philippines which will be inspected by the PSEC.
The issuer of the tokens will be able to advertise the whitepaper and post relevant information and advertisement on its website, social media, etc. However, the advertisement must contain a balanced description of the returns, prominent statements of warnings, a realistic impression of all fees and charges, and other forecasts based on past performances.
PSEC also suggests that all advertisements should be easily and clearly understood by the target audience. Therefore, they will need to be clear and helpful. In addition to this, the content of the advertisements must be consistent with the proposed whitepaper. Any advertisement with false, deceptive or misleading content are therefore prohibited.
The “Rules and Regulations Governing Initial Coin Offerings,” as it is called, will come into effect 15 days after publication in two newspapers of general circulation.