In photo: CEZA Senior Deputy administrator Raymundo Roquero (left) seals a deal with a handshake with Hong Kong-based GMQ represented by its legal representative Ricky Law on July 10. (Edd K. Usman)

By Edd K. Usman

If three Financial Technology Solutions and Offshore Virtual Currency (FTSOVC) licenses issued are a benchmark for success in starting a Financial Technology (Fintech) Hub, then it’s off to a good start for the Cagayan Economic Zone Authority (CEZA).

CEZA is managing the Cagayan Special Economic Zone and Freeport (CSEZFP) located in Sta. Ana and a few other towns, and is being positioned as the home of Philippines’ “Silicon Valley” and first fintech center.

Led by Secretary Raul Lambino, administrator and CEO, CEZA has already issued three FTSOVC licenses to Global Millennial Quickpay (GMQ), Inc. Ltd., of Hong Kong; Ultra Precise Investments Ltd. based in Bangkok, Thailand; and Liannet Technology Ltd., also of Hong Kong.

Lambino said GMQ has the distinction of being the first FTSOVC licensee of CEZA, followed by the two other companies.

“GMQ is a pioneer in CEZA’s venture to establish a financial technology and offshore virtual currency exchange business, which will eventually form the nucleus of the CEZA Fintech Hub,” he pointed out.

The CEZA head spoke before more than 100 Chinese blockchain and cryptocurrency-engaged foreign companies which participated in the GMQ Global Blockchain Summit at Sofitel Philippine Plaza Hotel, Pasay City.

Offshore blockchain

CEZA sees annual earnings of some P3.6 billion from the offshore blockchain and cryptocurrency locator companies.

QMQ in partnership with CEZA organized the summit to further promote blockchain technology and cryptocurrency that operates on it. It was highlighted by the awarding of the first FTSOVC principal license to GMQ.

The Hong Kong-based exchange has blockchain virtual asset trading platform (GMQ Coin Ex) and financial derivatives trading platform (GMQ Fin Ex).

GMQ is harnessing “decentralized democratic autonomy as business philosophy, that matches the needs of users in the mobile Internet era. It anchors this to its “in-depth exploration of virtual currency and blockchain industry..”

Also at the event, CEZA, represented by Undersecretary Raymundo Roquero, senior deputy administrator, and Ricky Law, GMQ legal representative, signed a deal to formalize the latter being a locator at the CSEZFP.

The second highest official of CEZA said as of July 10, the day of the summit, six companies have already passed CEZA stringent “probity and integrity check.”

Aside from GMQ, Ultra Precise, and Liannet, the other three that made it through are Formosa Financial Holdings Ltd.​ (Cayman Island), Tanzar Holding Ltd.​ and Rare Earth Asia Technologies Corp.​, both based on the British Virgin Islands (BVI).​

For the probity and integrity check, each company are required to pay US$100,000 to CEZA; if a company fails the test, the amount is not refundable, said Roquero.

As investor at the CSEZFP, each exchange must pay $1 million (over P53 million) in two years, he added.

Fintech Hub

Roquero said more than 80 companies applied as locators to the planned CEZA Fintech Hub, but initially, only 25 of them shall be issued FTSOVC license, depending on their respective probity and integrity check.

Why the check?

Roquero said there are many fintech companies engaged in fraudulent cryptocurrency business designed to scam gullible investors.

“We do not want scammers at CEZA,” he emphasized.

From the CEZA website, here are the exchanges that already signed up as locators at CSEZFP astride Sta. Ana municipality and other towns. From the CEZA, the exchanges that already signed up with CEZA included ​Xin Peng Group, Changwei International Co., Ltd., State Trust Union Capital Holdings, Ultra Precise Investments Ltd., Hachiman Technology Sdn. Bhd., MX Exchange Ventures, Hybrid Block, IPE Global Pte. Ltd., Superieur Tech. Pte. Ltd., Coin Bundle, Northern Orient Resources, Inc., Asia Premier International Ltd., Hong Kong Yuen Shing Hong Ltd., Mobile Pole Position Pte. Ltd., Madison Blockchain Strategy Investment Company Ltd., GMQ, Liannet, Asia Pacific Blockchain Association, Pacificnet Strategic Investments Ltd., Super Angels Ventures Ltd., AXN Holdings Ltd., Paradigm Technologies Unlimited Solutions Corp., Stepwyze LLC.

Also recently, South Korea’s Hanwha Group, a blockchain application developer, signed a Memorandum of Understanding (MoU) with CEZA.

Legislators such as Pasay City Rep. Imelda “Emmie” Calixto-Rubiano and Eastern Samar Rep. Ben Evardone joined the summit as they voiced support to CEZA’s vision of making the CSEZFP Asia’s “Silicon Valley” to attract digital companies and technology-savvy entrepreneurs.

“I am glad that they are prioritizing this industry that will revolutionize financial transactions worldwide,” Evardone said.

Calixto-Rubiano assured CEZA of her support and is certain of the support of the House of Representatives to economic and investment endeavors like what the agency is doing.

With only two households out of 10 in the Philippines having access to banking services, the Eastern Samar solon cited blockchain’s immense potentials in bringing financial inclusion to 90 percent of the country’s population.

Roquero said FTSOVC licenses being issued by CEZA to the fintech companies are “provisional” as the authority will have to monitor their operation and performance.

He assured the licenses are subject to longer validity or extension.

Roquero said a principal license is worth $360,000, aside from the $1 million required investment; a sub-license is pegged at $86,000.

A principal licensee like GMQ may sub-licensed 100 others, he said.