Philippines Releases Detailed Crypto-Asset Regulation Guidelines

The Philippine Securities and Exchange Commission (SEC) has recently put forth a robust set of rules to regulate crypto-assets, covering various aspects such as disclosures, public offerings, trading, and marketing practices. These regulations have been introduced with the intent to safeguard investors and promote transparency in the fast-growing digital asset market.

As per the new guidelines, companies looking to offer crypto-assets must submit a detailed disclosure document to the SEC, at least 30 days before any marketing or public sale activity. This document needs to outline key information about the offeror, issuer, features, risks, underlying technology, and potential risks associated with the crypto-asset, including aspects like loss of value and limited transferability.

For crypto-assets classified as securities, a registration statement approved by the SEC is mandatory before they can be publicly offered. Initial coin offerings (ICOs) will fall under this category if they involve the sale of securities, in line with the Securities Regulation Code (SRC).

Entities involved in offering or trading crypto-assets must comply with anti-money laundering (AML) laws and meet SEC reporting requirements. Non-compliance with these regulations could result in fines, suspension, or license revocation. Market manipulation, insider trading, and dissemination of false or misleading information are strictly prohibited, and marketing activities must accurately disclose risks without misleading representations.

Crypto-Asset Service Providers (CASPs) are required to adopt cybersecurity measures, maintain effective systems to detect market abuse, and ensure compliance with AML regulations. The SEC has the authority to audit, investigate, and impose penalties on entities that fail to comply.

Penalties for violations can range from fines of PHP 50,000 to PHP 10 million per violation, with individuals facing imprisonment of up to five years. Corporations may have their licenses revoked, and directors and officers can be held personally liable for breaches.

These new regulations will come into effect 30 days after being published in two newspapers of general circulation, underscoring the Philippine government’s commitment to creating a safe and transparent environment for crypto-assets. The Commission is inviting feedback from all interested parties on the draft proposal for the “SEC Rules on Crypto-Assets Service Providers.”