A panel discussion was held during day one of Blockchain Fair Asia focusing on the regulation of blockchain and crypto assets. Entitled “The Philippine Regulatory Landscape and Blockchain Technology,” the panel was moderated by Moses Wanki Park, a barrister at Liberty Chambers, Hong Kong.
Joining him on the panel were Rafael Padilla, a commercial lawyer, professor at San Beda University’s College of Law and member of the Blockchain Association of the Philippines, Gerb Reign Inajada, Assistant VP of Union Bank Philippines, Mark Vernon, of TagCash, and lastly, Yang Yang Zhang, Co-Founder of PDAX.
The forum started with a question about the definition of cryptocurrency and if it is a currency. Padilla stated that the Philippines is yet to legally define what cryptocurrencies are, and he says that cryptocurrencies should be defined as crypto assets, because not all cryptos function the same way, and the term cryptocurrency is too limiting. Inajada concurred that the definition would depend on the use. There was also a short talk on consumer protection regarding security tokens, with Padilla noting that these tokens are covered under both securities and consumer protection laws and need to be registered with the SEC. ICOs came into the crosshairs as well. Vernon saw the trend of ICOs as being on the wane.
The concept of regulation itself came under discussion, with Padilla noting that the laws must come into alignment with cryptocurrencies and blockchain. Zhang sees regulation as essential for securities tokens as these tokens interact within fiat gateways. She says the Philippines is a key area for her firm as the country’s financial regulators provided regulatory guidance while allowing innovation to flourish.
Stablecoins came under discussion, with Vernon defining the difference between Stablecoins and cryptocurrencies. It was noted that stablecoins were a good use case, although it presents its own issues.
Licensing issues were discussed, with Vernon and Zhang talking about the difficulties in gaining licenses regulations.
Next was a short discussion about taxation. While the Philippine’s tax laws do not specifically call out cryptocurrencies, the tax laws state that crypto is affected by income tax laws. Security tokens do not fall under income so they will not be taxed under income tax laws.
Padilla feels that crypto will soon fall under the gaze of tax institutions of the country soon. Zhang says that unless crypto is grandfathered as financial instruments, it would be difficult to grandfather tax provisions for them.
In the Philippines, Padilla, notes, all transactions using crypto are legally taxable events, whether it is crypto to fiat or fiat to crypto.
Talks about regulating blockchain technology came up last. Inajanda spoke about blockchain smart contracts making regulation easier and he hopes to have smart contracts used more often as instruments of compliance.
The Philippines may soon see new regulations, Padilla notes, with clearer regulatory guidelines possibly coming by Q1 of 2019.
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