Philippines To Welcome Crypto Firms In Tax-Friendly Economic Zone

News, Regulation | April 27, 2018 By:

The government of Philippines will allow ten crypto and blockchain firms to operate in a special tax-friendly economic zone to take advantage of tax perks while generating employment.

Raul Lambino, the chief of the Cagayan Economic Zone Authority (CEZA), said the government will legalize the entry of the companies in the CEZA, which is a major trans-shipment point for trade in the Asia-Pacific rim due to its strategic location between the Pacific Ocean and the West Philippine Sea.

“We are about to license 10 platforms for cryptocurrency exchanges. They are Japanese, Hong Kong, Malaysians, Koreans,” Lambino said. “They can go into cryptocurrency mining, initial coin offerings (ICO), or they can go into exchanges. But the exchange of fiat money into virtual currency, and vice versa, should be done off-shore to avoid infringing Philippine regulations.”

In February, the CEZA created rules allowing crypto companies to set up offices and facilities in the zone. Under the rules, the approved companies should invest a minimum of $1 million over the course of two years and spend $100,000 in licensing fees.

Lambino added that they are also considering establishing a new financial technology university in the economic zone, with a specific focus on blockchain technology to create a FinTech-educated workforce for the crypto companies.

Earlier this month, the Philippines Securities and Exchange Commission (SEC) warned the public against investing in 14 new unregistered cryptocurrency schemes. These include NewG, Smart Capital, Gener8X, Paid2Prosper, Coins and Mining Trading, PSOPOWER Apps, TradeConnec, IronTrading, ExpertTrading, OneCash, Lucky Coins, Miner’s Investment Group, Digital Coin Trading and All Pal for All Seasons.

The warning came after the Philippine National Police arrested NewG operators, accusing them of running a Ponzi scheme disguised as a bitcoin investment. The alleged Ponzi scheme has prompted Leila M. De Lima, an opposition senator, to urged her fellow senators to push for the swift passage of her bill that seeks to impose stiffer penalties for crimes involving cryptocurrencies.