The Securities and Exchange Commission (SEC) of the Philippines is taking steps to strengthen investor protection by proposing new rules requiring cryptocurrency asset service providers to register with the agency.
In draft regulations issued on Dec. 20, the SEC outlined that applicants must be registered as a stock corporation with the commission, employ at least four Philippine residents, and meet specific minimum capital requirements.
The SEC also emphasized that crypto asset securities cannot be sold without an approved registration statement. “The SEC shall have the power to order the removal of a crypto asset in a crypto asset exchange in the interest of investor protection,” the proposed rules state.
Furthermore, the draft rules restrict crypto asset service providers from offering or engaging in futures contracts, related derivatives, or margin trading unless expressly authorized by the SEC.
According to the SEC, a crypto asset is defined as a “cryptographically secured digital representation of a value or right that relies on a cryptographically secured distributed ledger or a similar technology to validate and secure transactions that can be transferred, stored, or traded electronically.”
“The Philippines is experiencing a widespread adoption of crypto assets,” the SEC noted. “According to various studies, the Philippines ranks high in cryptocurrency adoption compared with other jurisdictions. This new class of assets has various characteristics and use cases, one of which is as an investment product.”
The draft rules also aim to combat market abuse. They explicitly prohibit market manipulation, insider trading, and the unauthorized disclosure of nonpublic information. Additionally, the SEC will have the authority to revoke the licenses of service providers found engaging in illegal activities.
“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,” the SEC said.
To ensure fairness and transparency in the growing crypto market, the SEC highlighted the importance of clear regulatory frameworks. “The continued growth and development of new crypto-asset markets, services, and business models rely on clear, proportionate, and robust regulatory frameworks, which can ensure that markets are fair, efficient, and transparent,” the commission added.
The draft rules also require service providers to adopt a cybersecurity framework aligned with the government’s national cybersecurity plan and international best practices. Regular audits and reviews will also be mandated.
“Consistent with the objectives of the Philippine Development Plan 2023-2028, rapid technological advancements and evolving market needs have spurred the development and adoption of innovative financial products and services,” the SEC stated.
The SEC’s efforts are backed by the Securities Regulation Code, which aims to enhance market competitiveness through the enforcement of licensing and registration rules for innovative securities and technology-driven ventures. Additionally, the Financial Products and Services Consumer Protection Act empowers the SEC to create rules for specific financial products and services.
Earlier this year, the SEC requested the removal of Binance, the world’s largest cryptocurrency exchange by trading volume, from the Apple and Google app stores in the Philippines, citing its operation without proper licensing.
A recent survey conducted by blockchain software company Consensys revealed that 96% of Filipino respondents were familiar with cryptocurrencies, further underscoring the rising prominence of digital assets in the country.
