Asia’s ‘Silicon Valley’
This will be the first time crypto firms will be given the go-ahead to do business in the Philippines, a country which has, historically, been hostile toward all things cryptocurrency and blockchain-related. This is thanks to the Cagayan Economic Zone Authority (ZEZA) who, this year, set up a fintech hub which it hopes will be Asia’s answer to California’s ‘Silicon Valley’.
Raul Lambino, chief of CEZA, said the economic zone will permit cryptocurrency exchanges and mining, along with ICOs (initial coin offerings), the controversial funding method which sees tech companies sell cryptocurrency tokens instead of securities to raise money for blockchain-based projects.
CEZA is a state-owned corporation that manages the Cagayan Special Economic Zone and Freeport.
Lambino said: “We are about to licence 10 platforms for cryptocurrency exchange. They are Japanese, Hong Kong, Malaysians, Koreans. They can go into cryptocurrency mining, Initial Coin Offerings, or they can go into exchange.”
Crypto to fiat conversions should still be conducted offshore
He also emphasised the point that crypto-to-fiat and fiat-to-crypto exchange transactions should be conducted offshore, so as to avoid breaking Philippine law and attracting unwanted attention from the government and law enforcement.
Firms are expected to generate employment in exchange for the tax breaks they will receive. CEZA will also require the companies to invest at least $1 million over two years and pay up to $100,000 in licence fees.
CEZA is also looking to build a Blockchain and fintech university to provide skilled employees for the new companies, Lambino added.
Earlier this month, the Securities and Exchange Commission (SEC) of the Philippines issued an advisory on cryptocurrency Cloud Mining contracts, demanding that they be classified as securities.