Philippines Creates Special Economic Zone for Crypto Businesses
The government of the Philippines is taking positive steps toward developing a favorable environment for crypto companies. Ten crypto companies have been given the green light to operate in a special economic zone – the Cagayan Special Economic Zone and Freeport (CSEZFP), where crypto companies can take advantage of tax breaks.
Crypto Companies to Gain Tax Benefits
Recently, opposition Senator Leila M. De Lima created controversy by requesting that the Senate impose harsher penalties for crypto-related crimes. Senator Lima demanded a revision of the law in order to penalize bad actors in the crypto space.
The ten permitted blockchain and cryptocurrency companies will be the first to set up shop in the Cagayan Special Economic Zone and Freeport. According to one government official, crypto entities will enjoy tax benefits by being part of the special economic zone. However, the government expects those companies to generate employment.
Chief of the Cagayan Economic Zone Authority, Raul Lambino told Reuters:
“We are about to license 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 the exchange.”
The Philippines Aims to Be Asia’s Fintech Hub
In February, reports surfaced that the Filipino government was considering the idea of developing a fintech center in Cagayan province. Soon thereafter, the CAGAYAN Economic Zone Authority and Sinosun Subic Bay Holdings Corp. signed an agreement to develop a special economic zone to attract crypto businesses, offshore banking firms, virtual currency exchanges, and crypto mining companies.
At the time Lambino stated “Several companies all over Asia have approached us and some companies in the US are signifying interest to register as virtual currency platform operators in CEZA.”
The CEZA has developed a regulatory framework, wherein companies must invest at least $1 million USD over a period of two years and pay licensing fees of up to $100,000. The special economic zone will be home to blockchain and financial technology enterprises. The move was made to promote the Southeast Asian nation as a crypto-friendly country and label Cagayan province as a leading fintech hub.
However, the Philippine central bank remains yet to approve of the use of cryptocurrencies as legal tender in the country. Only last month, the Philippines Securities and Exchange Commission warned citizens about the online cryptocurrency service, Onecash, which promised outlandish returns of 200 percent in eight weeks. While such warnings are clearly sensible, it remains to be seen whether the Cagayan Economic Zone will soften the government’s overall view of cryptocurrency use and blockchain technology.
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