Philippine crypto service regulation may boost adoption

A plan by the Securities and Exchange Commission (SEC) to regulate cryptocurrency asset service providers in the Philippines could boost investor protection and entice more Filipinos to adopt the digital currency, analysts said. 

“This marks an important step toward a more organized and secure crypto landscape in the Philippines,” Arlone P. Abello, founding chairman at Innovative Movement of the Philippine Association of Crypto Traders, said in an e-mailed reply to questions.

“The proposed rules are an important milestone in providing investor protection, while creating a structure that can guide both new and established players in the crypto space,” he added.

Mr. Abello, also the chief executive officer at Global Miranda Miner Group, a crypto education platform, said the draft rules are also critical for traders. “Clearer regulations will help prevent fraud, reduce risks for traders and foster a more transparent market.”

“As the crypto industry in the Philippines continues to grow, these rules can help ensure that traders have a clearer understanding of their rights and obligations, creating a safer environment for everyone involved,” he added.

On Dec. 20, the corporate regulator issued draft rules on crypto service providers. Comments on the draft rules may be submitted until Jan. 18, 2025.

Under the rules, crypto providers must be a SEC-registered stock corporation, have at least four staff members living in the Philippines and meet the minimum capital requirements.

Service providers must be able to prevent and detect market abuse. The rules prohibit market manipulation, insider trading and disclosure of material and nonpublic information.

“Overall, it is very good to see… local regulations toward crypto players,” Jiro Luis S. Reyes, chief executive officer at crypto education platform Bitskwela, said in an e-mail. “I would like to stress the importance of support for educational efforts in the Philippines.”

He suggested a separate subclassification for crypto service providers that operate differently, such as a company offering trading of crypto assets versus a marketing company.

Mr. Reyes also sought clearer rules on the circumstances where the SEC can remove a crypto asset on an exchange to protect investors. “The phrase ‘in the interest of investor protection’ has been misused locally and internationally a lot of times.”

Nancy M. Ocampo-Omadto, chief legal counsel at crypto over-the-counter service Moneybees, said the SEC might have forgotten to include transitory provisions for the benefit of existing virtual asset service providers registered with the Bangko Sentral ng Pilipinas (BSP).

BSP Circular No. 1108, dated Jan. 26, 2021 treats crypto as virtual assets.

The government imposed a three-year moratorium on virtual asset service provider licenses due to risks to the financial system. The moratorium may be lifted next year. – Revin Mikhael D. Ochave, Reporter