Philippines SEC Proposes Comprehensive Rules for Crypto Asset Regulation

Highlights:

• The SEC’s new rules require crypto service providers to register and obtain a CASP license.
• Crypto providers must register and disclose risks and technology for public offerings.
• The SEC is gathering feedback to create a balanced framework by January 18.

The Philippine Securities and Exchange Commission (SEC) has unveiled a draft of its “Crypto-Assets Service Providers (CASP) Rules.” The framework covers various crypto trading activities. This includes SEC licensing requirements, market activities, and public offerings. The SEC Philippines emphasized the need for a regulatory framework. This is crucial due to the rapid growth of the cryptocurrency sector in the country.

A Comprehensive Framework for Crypto Activities

The Philippines SEC proposed that crypto service providers must register with the SEC. They must obtain a CASP license to operate in the Philippines. Stakeholders are encouraged to provide feedback on the regulatory framework. The deadline for submissions is Jan. 18 next year.

Firms must follow the rules in the framework to qualify for a CASP license. They need at least four staff members residing in the country. The firm must be a stock corporation registered with the SEC. Additionally, they must meet the SEC’s minimum capital requirements.

The SEC will investigate a registered firm’s operations if it breaks the rules. This includes checking for any wrongdoing. Penalties for violations include fines ranging from PHP 50,000 to PHP 10 million per infraction. Individuals may face imprisonment of up to five years. Corporations could lose their licenses, and directors and officers may be held personally liable for breaches.

CASP license holders must follow the National Cybersecurity Plan to reduce money laundering and cybersecurity risks. They must also undergo routine audits and assessments to ensure their systems remain secure against threats.

Philippine SEC Tightened Crypto Rules

The Philippine SEC just unveiled draft rules for Crypto-Asset Service Providers (CASPs), pushing for tighter controls to level up transparency and investor safety.

Crypto companies now need to register, file detailed disclosures on tech… pic.twitter.com/OJqBFpX05r

— Mario Nawfal’s Roundtable (@RoundtableSpace) December 24, 2024

Philippines SEC stated:

“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.”

Crypto-Asset Disclosure Requirements for Companies

Companies planning to offer crypto-assets to the public must submit comprehensive disclosure documents to the SEC 30 days before marketing. These documents should provide details about the company’s background and the technology behind the crypto asset. They should also outline potential risks and the possibility of value loss.

Philippines Strengthens Crypto Regulations

The new regulations take effect 30 days after publication in two newspapers of general circulation. Under the new rules, crypto-assets considered securities need SEC approval. This applies to ICOs if the asset qualifies as a security under the SRC.

The Philippine SEC Chair Emilio B. Aquino announced in May that the commission would introduce guidelines for regulating crypto trading by the second half of this year. This announcement followed the Philippine SEC’s decision to ban Binance for operating without a license.