Last April, the Philippine government has approved the entry of cryptocurrency exchanges to conduct business in the Cagayan Economic Zone Authority (CEZA). These legalized exchanges will enjoy tax benefits, will be allowed to offer Initial Coin Offerings (ICOs), and may engage in crypto mining operations.
The CEZA administrator expects to rake in $67 million from the legalized cryptocurrency exchanges through license issuances.
According to CEZA chief Raul Lambino, the CEZA is “about to license 10 platforms for cryptocurrency exchanges. They are Japanese, Hong Kong, Malaysians, Koreans…They can go into cryptocurrency mining, initial coin offerings, or they can go into exchange.”
The CEZA also previously revealed plans to issue 25 primary licenses to cryptocurrency exchanges. As a caveat to license issuance, companies must invest at least $1 million in the zone over a two-year period among other requirements.
While other details are not yet released, what we know for now according to a Philippine government news agency is that each ‘principal license’ will be priced at $360,000 while a ‘regular license’ will cost $85,000. The information regarding the difference between a principal and a regular license have yet to be divulged. Each recipient of a principal license will be allowed to issue four regular sub-licenses to traders and brokers.
The CEZA is expected to generate 3.6 billion pesos, approx. $67 million, from the issuances of the 25 principal licenses and sublicenses alone. The economic zone authority is expected to generate further revenue with a 0.1 share in every single transaction conducted at these licensed exchanges.
According to reports, CEZA has already received a total of 70 license applications, and six applicants have already paid for the licenses. Among those already granted a principal license is Hong Kong-based cryptocurrency operator, Golden Millennial Quickpay, according to a CEZA press release.
Senior Deputy Administrator Raymundo T. Roquero stated that “the license was issued last week. They were the first, [along with two other firms]. These are all Hong Kong-based, [while one] is from Bangkok, Thailand. These are offshore companies with a capital investment of $500,000. They have a committed investment to us of $1 million [each].”
As a limitation, however, licensed exchanges within the economic zone will not be allowed to offer services to retail investors in the Philippines. To run a licensed crypto trading platform in the country, operators will have to be approved by the Bangko Sentral ng Pilipinas (BSP), the country’s central bank. The Philippines was among the earliest nations in the world to release regulations for the cryptocurrency sector, specifically bitcoin exchanges, in early 2017.
