Ofcourse they should be allowed to, that is like asking should BTC be allowed to exist, no? I say more power to them but best to improve upon the foundation Bitcoin has laid out. I think it could be a good way to generate money to their economy and can't blame them for trying it out.
This looks like a step in the in the right direction...
Question: Wouldn't there be a legal issue if they use Bitcoin tech (particularly blockchain tech) and not keep it open source? How would the open source license be enforced?