Philippines’ SEC warns public of unauthorized digital lending services

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The Philippine Securities and Exchange Commission (SEC) has issued an advisory against five online digital lending firms in the country. According to the advisory, the firms do not have the license to operate in the Philippines as they are neither registered nor listed as part of Recorded Online Lending Platforms.

The erring entities include PURECASH, SUGERCOIN, TCREDIT, GOLD APPLE, and SPENDCASH. In addition to operating illegally, the SEC warns that the firms have been engaged in unsavory business practices like resorting to blackmailing citizens into recovering debts. 

The commission’s public advisory notes that digital lenders access debtors’ phonebooks, post debtors’ personal information online, use profane language, and even go the extra mile of threatening debtors with physical injury or death. The advisory reminds operators that there are penalties for operating a lending business without licenses, while those involved in unwholesome practices face stiffer penalties.

The SEC writes that the firms are “criminally liable under Section 12 (1) and section (12) (2)(a) of R.A No. 9474.” Their violation are also grounds for a penalty amounting to not less than PHP10,000 ($170) and not more than PHP50,000 ($847). On top of this, at the court’s discretion, they could also “face imprisonment of not less than six months but not more than ten years or both.”

The SEC also issued an advisory against Lodicoins, a virtual currency it claims is used to defraud investors out of their hard-earned funds. Victims were swindled into investing in Lodicoins via a claim from the founders that the “ICO (initial coin offering) will earn at least 1,000% in profits.” Investors were also enticed with luxury gifts, cash, and travel incentives which the SEC says gave it the flavor of a Ponzi scheme.

Top regulators in the Philippines need clearer regulation

The Bangko Sentral ng Pilipinas (BSP) is seeking increased powers to control the digital assets industry and protect investors’ interests. BSP, the country’s central bank and the main banking regulator, is turning to the legislature to pass new bills that will give it broad powers to regulate the industry.

The SEC is also advocating for an increased role in policing the virtual currency markets, and its chief argument is that several digital assets fall under its purview as securities.

At the moment, BSP only has minimal powers like issuing circulars and advisories to the public and has no control over the activities of foreign Virtual Asset Service Providers (VASPs). Furthermore, the absence of rules on non-fungible tokens (NFTs) and decentralized finance (DeFi) has complicated issues for Filipino regulators.

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