SEC Drafts Rules on Crypto Services
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- 07 Jan 2025
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The widespread adoption of cryptocurrency as an alternative financial product has prompted the Securities and Exchange Commission (SEC) to develop guidelines for the sector's service providers, enhancing investor protection. On December 20, 2024, the SEC published its draft rules concerning crypto asset service providers (CASPs), which are entities that offer or engage in the provision of one or more crypto asset services, including the creation of digital platforms for these products.
Under the proposed rules, which are open for public comment until January 18, 2025, individuals or companies must secure a license from the SEC to provide crypto asset services in the country. To qualify for registration as a CASP, applicants must meet several requirements, including:
- Being a stock corporation registered with the SEC.
- Having at least four staff members based in the Philippines.
- Meeting minimum capital requirements.
- Submitting a complete application for authorization to the SEC.
Protecting Consumers
The SEC emphasized that the draft rules consider the growth and development of new crypto asset markets, services, and business models. The commission aims to establish a legal framework that protects consumers from potential harms and systemic risks. It also seeks to provide consumers with the option to engage in crypto asset activities through licensed and authorized intermediaries.
Similar to other securities traded in the Philippines, crypto assets can only be offered to the public after the qualified CASP has filed a disclosure document with the SEC. This document must contain relevant information, including key features, risks, and the rights and obligations associated with the crypto assets.
Additionally, initial coin offerings (ICOs), which involve raising funds by offering unique digital coins or tokens to the public, can only proceed after the CASP has secured an approved registration statement.
Data from global blockchain analysis firm Chainalysis indicates that the Philippines ranked eighth in the world for cryptocurrency adoption as of October last year. A separate report by international cryptocurrency payment gateway Triple-A revealed that in 2022, nearly 7 million Filipinos, or approximately 6.13% of the population, owned cryptocurrency assets.
These draft rules represent a significant step towards establishing a regulatory framework for the cryptocurrency sector in the Philippines, aiming to foster a safer environment for investors and promote responsible growth in the industry.
