The Securities and Exchange Commission (SEC) of the Philippines has introduced draft guidelines aimed at regulating the conduct of crypto-asset service providers across the country. The proposed rules are designed to strengthen the commission’s oversight powers while providing a regulatory framework to address the growing complexities of digital financial products.
In a statement, the SEC emphasized that the new rules would ensure fair, efficient, and transparent markets, offering a measure of protection for investors in these highly volatile assets. “The continued growth and development of new crypto-asset markets, services, and business models relies on clear, proportionate, and robust regulatory frameworks, which can ensure that markets are fair, efficient, and transparent. Financial consumers and investors rely on trustworthy intermediaries to transact with,” the commission stated.
The rules apply to all service providers offering crypto-related services within or to the Philippines or those whose operations affect the country. Under the draft guidelines, no individual or entity may provide crypto-asset services without acquiring the necessary licenses for their activities.
To secure registration as a crypto-asset service provider, applicants must be registered as stock corporations with the SEC, have a minimum of four Philippine-based staff members, and meet capital requirements stipulated in the draft regulations. The commission also stressed that crypto-assets cannot be sold, offered, or distributed in the Philippines without compliance with the new guidelines.
The SEC highlighted that the framework aligns with international standards and aims to protect financial consumers from potential harms while mitigating systemic risks. “In alignment with international standards, the SEC is establishing an affirmative legal framework to provide protection against consumer harms and systemic risks and to afford consumers the choice of engaging in crypto-asset activity with licensed and authorized intermediaries,” it noted.
The guidelines also address financial and operational resilience, transparency regarding risks, and mechanisms for redress. Specific measures are included to ensure proactive management of risks associated with digital platforms and crypto-asset technologies.
The commission is calling on all stakeholders and interested parties to submit their comments on the proposed rules by January 18, 2025.
The move is seen as part of the SEC’s broader mandate under the Securities Regulation Code, which tasks the agency with promoting market competitiveness and ensuring proper licensing and registration of innovative financial ventures and trading markets.
By laying the groundwork for robust crypto-asset regulation, the SEC aims to foster investor confidence and create an environment that supports innovation while mitigating associated risks.