The Office of the Bolsa and Securities Commission of the Philippines of the General Advisor (SEC-GC) He has opined that Bitcoin does not automatically consider security under the Country Regulation Code (SRC) of the country, but certain transactions involving Bitcoin may be under the regulations of securities depending on their structure.
Why does this news matter? The decision could affect cryptographic exchanges, new Fintech companies and institutional investors in the country.
Key details:
The SEC issued opinion No. 24-44 In response to a request by Bonetto Ventures, Inc. (BVI), a company that operates a Bitcoin exchange platform.
The questions asked:
BVI He is asking the SEC to give an opinion on the following consultations:
- It’s Bitcoin Security under the definitions established in the Securities Regulation Code (SRC)?
- It is BVI Is it considered that it is dedicated to the sale of values ​​as derivatives because it is a Bitcoin exchange platform?
How the SEC replied the consultation
The sec He reviewed the Bitcoin classification using the Howey test, a legal standard to determine if an asset qualifies as security.
To recapitulate, the Howey test is often used to determine if a transaction qualifies as an investment contract and, therefore, falls under the regulation of the SEC.
Howey Test Verification List
- Is there an investment of money or other form of value (such as cryptography, property or assets)?
- Is the investment grouped together with others, where earnings or losses are shared?
- Do investors buy with the expectation of making a return on investment?
- Do investors mainly trust the management or business efforts of the promoters, a company or a third to generate profits?
However
The regulator He discovered that Bitcoin lacks fundamental security characteristics, such as voting rights, dividends and corporate governance.
An interest in the block chain does not necessarily imply these rights or that there is a company with profits. In addition, a bitcoin wallet could not be similar to a stock certificate
SEC Office of the General Advisor
Still: SEC clarified that although Bitcoin is not inherently security, transactions involving Bitcoin may be under the definition of an investment contract if they meet certain conditions.
“From the above, depending on certain circumstances, Bitcoin can be considered an investment contract, therefore, security.”
SEC Office of the General Advisor
The SEC-GC concluded with the following:
“Taking into account the numerous factors that will be considered a case case as mentioned above, the commission cannot give a definitive response due to the limited facts provided.”
SEC Office of the General Advisor
Current regulatory landscape
The Central Bank of the Philippines (BSP) Regulates virtual currency exchanges (VCE) that is now called virtual asset services suppliers (VASP), which requires compliance with money laundering policies and consumer protection. (Read more: Virtual currency exchanges list licensed in the Philippines)
SECOND Recently it has issued a rules eraser on suppliers of cryptographic asset services (CASP):
Public trade of basic products contracts It remains suspended in the Philippines, limiting the trade of derivatives related to Bitcoin. The futures trade was also discussed in the rules of the DEC CASP draft, indicating that the platforms cannot offer the trade of future cryptographic without the explicit approval of the SEC.
The key conclusions:
- While the SEC did not directly classify Bitcoin as security, the companies that deal with it must be cautious.
What follows?
- The sec It can emit more clarifications as the cryptographic industry evolves.
- Companies Treating in Bitcoin must review your compliance frames to ensure that they do not fall under the securities regulations.
This article is published in Bitpins: Exclusive: Philippines SEC refuses to classify Bitcoin directly as a security
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