The Philippines’ Securities and Exchange Commission (SEC) has drafted new operational rules to govern service providers in the virtual currency space, according to a report from the Manilla Bulletin.
The proposed Rules and Regulations (IRR) of Republic Act No. 11765, have been made available for members of the public to comment on. The SEC rule is designed to assist in the application of the new Financial Products and Services Consumer Protection Act (FCPA).
“The draft IRR will operationalize the newly signed law that aims to protect the interests of financial consumers by strengthening the country’s financial regulators by providing them with rule-making, surveillance, inspection, market-monitoring, and more enforcement powers,” according to the SEC.
Domestic law empowers the SEC to make rules for applying new legislation in its jurisdiction to enable it to enforce the laws. Both the Bangko Sentral ng Pilipinas (BSP) and the Insurance Commission (IC) have been saddled with such powers to make additional rules to complement existing laws.
With the new rules, the SEC is starting to go after erring virtual currency firms offering unregistered securities to the local public. Analysts have pointed out that the wording of the draft rules indicates a brewing vendetta against Ponzi operators in the space and an extension to the broader financial markets.
The FCPA became law in May 2022 in the same timeframe as Terra’s collapse. At that time, the policymakers sought to protect citizens investing in the virtual currency industry and bring digital asset service providers‘ operations in line with global best practices.
Just another day at the office
The SEC’s incoming rules have been described as just another day at the office for the watchdog following a long year of cracking down on bad actors in the space. The body issued numerous advisories against virtual currency firms in the country soliciting investments in their projects.
The public advisories warned Filipinos that the offerings amounted to investment contracts that should be registered with the SEC. Going further, the commission stated that most virtual currency firms making the solicitations operated like Ponzi schemes.
In 2023, several firms have come within the SEC’s crosshairs for failing to register their investment products. Bit-Cryptorising Marketing Consultancy and Lele Gold Farm are the latest firms to be issued with warnings from the commission as the SEC braces for a tough year ahead.
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