In order to protect investors, the Philippine SEC wants to put the burden on issuers to prove their tokens are utilitarian.
On August 2, the Securities and Exchange Commission (SEC) in the Philippines issued a draft[1] outlining new proposed regulations for companies conducting initial coin offerings (ICOs).
The new draft rules contain standards that require any company in the country wishing to issue an ICO to first submit an initial assessment request to the SEC 45 days before the commencement of the coin sale. In this assessment request, the would-be issuer must explain its project in detail and provide evidence that the company is in compliance with stipulations laid out in the draft. The document describes rules concerning advertising, qualifications of issuers and advisors, and the content and accessibility of the company's white paper.
Perhaps more interestingly, the Philippine SEC is looking to define all tokens as securities by default. This viewpoint is clearly stated in a summary[2] of the rules published alongside the draft. However, neither the draft nor the summary include any information regarding what would qualify a token or coin to be exempt from designation as a security.
The commission justifies the move by explaining that the SEC's inability to regulate ICOs as securities is "dangerous to the investing public who are left with no clear recourse once the said ICOs are proven to be scams. Therefore, the SEC will put the burden of proving that the tokens issued through an ICO in the hands of the proponents by presuming that the tokens are securities unless proven otherwise."
The draft also states exemptions to the requirement that security tokens be registered with the SEC prior to an ICO. The draft states
