October 16, 2018. The Cagayan Economic Zone Authority (CEZA) has reported a 212% increase in income for the first 9 months of 2018, higher than what the government agency earned during the same period in 2017. CEZA attributed the increase in income from licenses and collections from fintech and offshore virtual currency firms applying for an offshore virtual currency license with the agency.
In a press release, CEZA confirmed that Php 371,949,735.32 were collected from financial technology services and offshore virtual currency exchange (FTSOVCE) licenses and applications. All in all, CEZA posted an income of Php 517,296,127.70 for 2018 so far, compared to Php 166,339,889.03 posted within the same period last year.
According to Sec. Raul Lambino, they expect more earnings as soon as the companies that applied for licensing begin trading cryptocurrencies or conduct placement of coins. This is because CEZA has a share in every transaction. Under the multi-tier system, the government shares in the sale increase as the transaction volume increases. Currently, the maximum fee is pegged at $10,000 if the average monthly volume is $10 million. The fee grows bigger as the volume increases, capping it at $800,000 at the $89 million to $999 million daily deals.
The FTSOVCE license allows a firm to set up offshore fintech and cryptocurrency trading firms servicing residents outside the Philippines. This system allows companies to set up shop in the Philippines, specifically in Cagayan, even though current laws in the Philippines will not allow them to transact with Philippine residents. This project by CEZA, dubbed the “Crypto Valley in Asia” project, are expected to generate millions in revenue for the government and jobs for the people in the region. CEZA has conducted roadshows, like the one in Tokyo, Japan to entice investors to consider the Philippines when they establish fintech, cryptocurrency, or blockchain operations.
The FTSOVCE License can be a principal license or a regular license. The principal license allows the firm to conduct offshore fintech and offshore virtual currency exchange activities. Some of the firms with this license are Golden Millenial Quickpay Inc. Ltd., Liannet Technology Ltd., Rare Earth Asia Technologies Corp., and Tiger Wheel Ltd.
On the other hand, a regular license will allow a firm to conduct virtual currency exchange activities. 2 firms with this license are Cezex Trading Pte. Ltd. and Unicorn Venture Investment Limited.
All these licenses are still provisional. CEZA will conduct checks and monitoring to ensure that the companies are engaging only in the activities they are allowed to do.