The Philippines’ Securities and Exchange Commission (SEC) has released a draft of the "SEC Rules on Crypto-Assets Service Providers" (CASP), establishing a regulatory framework for entities offering crypto-related services. The SEC seeks public feedback on these proposed rules until January 18, 2025.
Below is a distilled summary of the draft rules, highlighting their scope, requirements, and implications:
Key Highlights of SEC Draft Rules
Coverage and Applicability
The rules apply to all entities offering crypto-asset services in the Philippines or impacting its markets:
- Acknowledges overlapping jurisdiction with agencies like the Bangko Sentral ng Pilipinas (BSP) for Virtual Asset Service Providers (VASPs).
- Clarifies alignment with broader financial regulations.
Registration Requirements
CASPs must obtain an SEC license before operating. Minimum qualifications include:
- Incorporation as a stock corporation.
- At least four local staff members.
- Compliance with SEC-set capital requirements.
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Public Offerings of Crypto-Assets
Disclosure mandates for public offerings:
- Issuer and asset details.
- Risks, obligations, and technical specifications.
- Mandatory warnings about potential value loss and illiquidity.
Exemptions:
- Airdrops.
- Blockchain maintenance rewards.
- Tokens in closed merchant networks.
Crypto-Asset Securities
Assets classified as securities under the Securities Regulation Code (SRC) require:
- SEC-approved registration statements.
- Compliance with Initial Coin Offering (ICO) regulations.
Trading and Exchange Rules
- Prohibits support for assets linked to gambling or anonymity.
- Bans derivatives/margin trading without explicit SEC approval.
"The SEC may order asset removal from exchanges to protect investors."
Marketing and Promotion
Rules for crypto marketing:
- Covers social media, events, and educational content.
- Requires plain-language risk disclosures.
- Hold CASPs accountable for third-party marketers.
AML/CFT Compliance
CASPs must adhere to:
- Anti-Money Laundering Act (AMLA).
- Counter-terrorism and proliferation financing laws.
Continuing Obligations
- Market abuse detection systems.
- Annual cybersecurity reviews.
- Surveillance for new activity risks.
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Prohibited Activities
- Market manipulation (e.g., wash trading).
- Insider trading and unlawful disclosures.
Enforcement Powers
The SEC can:
- Impose fines (₱50,000–₱10M) or suspensions.
- Revoke licenses for persistent violations.
FAQs
1. Who needs to register as a CASP?
Any entity offering crypto services in the Philippines, including exchanges and ICO issuers.
2. What are the penalties for non-compliance?
Fines up to ₱10M, imprisonment (1–5 years), or license revocation.
3. Are airdrops regulated?
Yes, unless classified as exempt (e.g., free distributions).
4. How can stakeholders submit feedback?
Email [email protected] by January 18, 2025.
5. Can CASPs offer derivatives?
Only with SEC approval; default prohibition applies.
6. What cybersecurity measures are required?
Alignment with national/global frameworks and SEC guidelines.
Next Steps
- Submit comments to the SEC by January 2025.
- Monitor updates for finalized rules post-feedback.
Stakeholders should prioritize understanding these draft rules to ensure compliance and leverage emerging opportunities in the Philippine crypto market.