Crypto-Asset Service Providers in the Philippines Prepare for New SEC Regulation

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The Securities and Exchange Commission (SEC) of the Philippines has released an exposure draft for its proposed SEC Rules on Crypto-Assets Service Providers (CASP Rules), seeking public input.

This initiative aims to establish a regulatory framework for the growing crypto-asset market in the country.

Cryptocurrency Growth in the Philippines

The Philippines has emerged as a global leader in cryptocurrency adoption, driven by its tech-savvy population with an average age of 25.3 years.

With the global user base for crypto-assets exceeding 562 million, the need for strong regulation to tackle risks like fraud and market manipulation becomes essential.

The proposed CASP Rules aim to protect investors, encourage innovation, and align with international standards such as the guidelines of the International Organisation of Securities Commissions (IOSCO).

The CASP Rules define crypto-assets as digital representations of value based on distributed ledger technology and regulate activities like offering, trading, and custody.

All crypto-assets service providers in the Philippines must register with the SEC and acquire a license, meeting strict criteria, including compliance with the Financial Products and Services Consumer Protection Act (FCPA) and minimum capital requirements.

Public Offerings and Consumer Protection

Public offerings of crypto-assets are closely monitored, requiring entities to submit detailed disclosure documents to the SEC at least 30 days prior to any marketing activities. These documents must include comprehensive information about the offeror, the technology, associated risks, and potential loss of value.

The rules also stress the importance of combating financial crimes, mandating providers to adhere to anti-money laundering laws and prevent market manipulation and insider trading.

The SEC underscores the significance of cybersecurity, requiring providers to implement strong measures aligned with the National Cybersecurity Plan. Regular audits and reviews ensure compliance and readiness for emerging threats.

Towards a Sustainable Framework

The proposed rules mark a significant step toward establishing a secure, transparent, and sustainable environment for crypto-asset activities. While the requirements may pose challenges for smaller entities, they demonstrate the SEC’s dedication to investor protection and market integrity.

Stakeholders are urged to provide feedback by January 18, 2025, promoting a collaborative approach to finalizing the regulations.

The SEC’s initiative reflects the Philippines’ ambition to lead in the global crypto economy. By balancing innovation and regulation, the CASP Rules aim to support the sector’s growth while ensuring consumer protection and fair market practices.

Featured image credit: Edited from Freepik

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