The Cagayan Economic Zone Authority (CEZA) has received the backing of Japan in urging Philippine legislators to craft laws on emerging financial technologies such as cryptocurrencies and security tokens.
In a statement, the CEZA said its administrator and CEO Raul Lambino met with Japanese Minister of State for Science and Technology Policy Naokazu Takemoto to discuss how Philippines and Japan can work together for the future financial technology businesses in the country and the Asian region.
Lambino cited the urgent need for a set of rules and regulations or a law that would help the Philippines become more competitive in the field of financial technology.
In 2017, CEZA launched its "Crypto Valley of Asia" initiative, which aims to provide a stable and safe region for blockchain developers and cryptocurrency exchange operators to domicile their back office support infrastructure.
It currently has 25 licensee companies from all over Europe and Asia, including Japanese developer ALLEX, a security token issuer that provides solutions on exchanges including management, settlement, and related operations.
Security token offerings or STOs are digitized securities such as stocks, bonds, and equity interests in funds that use blockchain technology as its main platform.
“The word ‘security’ in STO is not the same as cybersecurity and computer securities. It means ‘securities’ in terms of assets or a way to issue digital securities and raise funds through the blockchain. This digitalization is expected to enable people who could not participate in the investment process to make small-scale investments," Takemoto said.
Despite being developed in the country, Filipinos unfortunately cannot enjoy using security tokens because of the absence of laws that would allow it.
“Congress needs to enact laws surrounding STOs and virtual currencies, and appoint a particular government agency to have jurisdiction to supervise the implementation of this. If not, we, particularly the CEZA, will end up being a mere host for back offices or business processing office (BPO) for foreign fintech companies while all the buying, trading, and offering payments will be done offshore,” Lambino said.
The CEZA chief and the Japanese minister both hoped that the Philippines will follow suit and catch up to other neighboring countries such as South Korea, Singapore, Hong Kong, and of course Japan, which are now actively setting up their rules and regulations for virtual currency exchanges.
"This matter is unstoppable. It’s now being practiced and accepted by many jurisdictions, including the US, and this new idea of putting up security tokens, which are asset-backed and completely different from the initial utility tokens, will be, I think, the answer to the problems of scams or fraudulent activities regarding this new dimension of business,” Lambino said.
Aside from modernizing the country’s financial landscape, establishing clear-cut rules and regulations on security tokens and cryptocurrencies in the Philippines will also help grow the economy by attracting more investors and providing more jobs for Filipinos, according to Lambino. —NB, GMA News