The Securities and Exchange Commission (SEC) of the Philippines has introduced an exposure draft for its proposed “SEC Rules on Crypto-Assets Service Providers (CASP Rules)“, inviting public feedback.
This move seeks to establish a regulatory framework for the burgeoning crypto-asset market in the country.
Cryptocurrency Growth in the Philippines
The Philippines has emerged as a global leader in cryptocurrency adoption, driven by its tech-savvy population with an average age of 25.3 years.
As the global user base for crypto-assets surpasses 562 million, the need for robust regulation to address risks such as fraud and market manipulation becomes crucial.
The proposed CASP Rules aim to safeguard investors, foster innovation, and align with international standards like the guidelines of the International Organisation of Securities Commissions (IOSCO).
The CASP Rules define crypto-assets as digital representations of value reliant on distributed ledger technology and regulate activities such as offering, trading, and custody.
All crypto-assets service providers in the Philippines must register with the SEC and obtain a licence, meeting stringent criteria, including compliance with the Financial Products and Services Consumer Protection Act (FCPA) and minimum capital requirements.
Public Offerings and Consumer Protection
Public offerings of crypto-assets are tightly regulated, requiring entities to file detailed disclosure documents with the SEC at least 30 days before any marketing activities. These documents must include comprehensive information about the offeror, the technology, associated risks, and potential loss of value.
The rules also emphasise combating financial crimes, mandating providers to comply with anti-money laundering laws and prevent market manipulation and insider trading.
The SEC highlights the importance of cybersecurity, requiring providers to adopt robust measures aligned with the National Cybersecurity Plan. Regular audits and effectiveness reviews ensure compliance and adaptability to emerging threats.
Towards a Sustainable Framework
The proposed rules represent a significant step towards creating a secure, transparent, and sustainable environment for crypto-asset activities. While the requirements may challenge smaller entities, they demonstrate the SEC’s commitment to investor protection and market integrity.
Stakeholders are encouraged to submit feedback by 18th January 2025, fostering a collaborative approach to finalising the regulations.
The SEC’s initiative reflects the Philippines’ ambition to lead in the global crypto economy. By balancing innovation and regulation, the CASP Rules aim to support the sector’s growth while ensuring consumer protection and fair market practices.
Featured image credit: Edited from Freepik
