Following the recent release of the Philippine Securities and Exchange Commission’s (SEC) draft “SEC Rules on Crypto Asset Service Providers” (CASP), the Philippine crypto community shared various opinions.
What is the rule on CASP? Its objective is to establish a solid regulatory framework for entities that offer services related to cryptocurrencies. The draft rules outline comprehensive requirements and obligations for these entities, with the aim of ensuring transparency, security and compliance with financial and anti-money laundering regulations.
What are CASPs according to the SEC? CASPs refer to Cryptoasset service providersdefined as entities that offer services related to cryptoassets in the Philippines or services that impact their markets.
Comments reflect mixed reactions to the SEC’s draft crypto rules, with some urging proactive community involvement and balanced regulation, while others criticize the rules as restrictive, misaligned with innovation, or motivated by control rather than the protection.
There are responses to the SEC’s draft rules for cryptocurrency regulation that reflect a mix of optimism and caution. A community member is calling for a comprehensive legislative framework from Congress to address cryptocurrencies, blockchain, and digital assets comprehensively. There are also comments appreciating the progress in adoption and the potential to reduce scams.
“These SEC crypto rules are like training wheels for a fast-moving bicycle: they are necessary, but they should not slow down innovation. It is crucial to maintain a balance between protecting investors and promoting progress. Let’s make sure the Philippines stays ahead in the cryptocurrency race! Henry James Banayat, CEO of Bitshares Labs, wrote noting that the deadline for comments on the draft is also approaching.
Christine Erispe added that she sees the rules as a positive step and emphasized that clear but non-restrictive regulations can attract legitimate investors to the local crypto scene.
Another comment emphasized the positive aspect, noting that the rules represent a step towards consumer protection by requiring exchanges, coins, tokens and cryptocurrency providers to comply with the guidelines, helping to prevent sudden losses due to manipulation of the cryptocurrencies. The commenter also noted that the rules specify that airdrops and free distributions are exempt from certain taxes.
Additionally, regarding rules prohibiting futures trading, one comment supported the SEC, pointing out that futures trading is rigged and exploited by whales to make easy money. The commentator argued that whales can easily manipulate prices through pump-and-dump tactics, causing sell-offs and benefiting from market volatility.
Reviews
Critics of the SEC’s draft rules raised concerns about their originality, intent and effectiveness. One comment criticized the perceived imposition of Western ideologies, while another argued that the rules could stifle innovation and overburden startups, seeing them as a step backwards and questioning the SEC’s understanding of cryptocurrencies.
“It’s just a copy of MICA. Regulators here rarely have a sense of independent thinking and prefer to copy what other countries do,” said one community member.
Expressed Frustrations:
There are also critical comments reflecting frustration with the SEC’s approach to cryptocurrency regulation. One commentator fears manipulation by authorities, while another compared the Philippines’ lack of advanced trading options to that of more developed countries like the United States, questioning how the SEC hopes to encourage trading on the Philippine Stock Exchange (PSE). ) under such limitations. They suggest that the country is falling behind and that investors could find better opportunities abroad, where such options are already approved and accessible.
Carlos Tapang, CEO of Rock Stable, maintains that while scams are a concern, the SEC’s restrictions would hinder innovation rather than solve the problem. He argued that they hinder innovation and make it difficult for new companies to attract investment. Tapang points out that in the United States, creating a corporation is quick and easy, but in the Philippines it is a long and expensive process. He questions why the SEC needs to police company formation and whether they are better judges of a company’s viability than investors.
- “It takes less than an hour to set up a limited company in the United States. In Pinas, it took me three months and three lawyers (to set up a public limited company). Why does the SEC have to control the formation of corporations? Do they know something that investors don’t know? Are they better judges of a company’s viability than investors? “
- “In the United States, up to thousands of corporations can be formed in a state each month. Only a few of them will survive after one or two years. Let people see how far they can take their ideas. Of these thousands of ideas, some will work. Does the SEC claim to know which startup applicants would be successful? he wrote.
Furthermore, a community member also emphasized that the draft rules could complicate things for developers, coin creators, and promoters, especially those behind new tokens and memecoins. These entities will need to register with the SEC, and failure to do so will result in their ICOs, social media promotions, and other activities being deemed invalid, which could result in bans or shutdowns in the Philippines.
Suggestions:
On another note, one of the comments suggested that the current penalties for cryptocurrency-related crimes, including a maximum prison sentence of 5 years and fines of up to $2 million, are too lenient.
They argue that such penalties do not deter criminals, as they could still earn large sums, such as $100 million, and only serve a short prison sentence. They propose much harsher penalties, such as a minimum sentence of 30 years in prison and fines of at least $20 million, to more effectively deter fraudulent activity in the crypto space.
On the other hand, one comment maintains that since cryptocurrencies are not yet classified as securities in the Philippines, the SEC does not have jurisdiction to regulate them. It suggests that Congress should first pass legislation defining cryptocurrencies before the SEC enforces any rules, ensuring a legal basis for regulation.
There are also comments encouraging the Filipino crypto community to take the opportunity to provide feedback on the SEC’s draft rules before they are finalized. By using the public comment window, the community can ensure that regulations protect investors while allowing the industry to grow and prosper.
The SEC is soliciting public comments on the proposed rules until January 18, 2025. Comments can be submitted by email to [email protected] or by physical mail to its office in Makati.
worth reading: Recently, BitPinas outlined the Philippine SEC’s draft rules for cryptoasset service providers, establishing regulatory requirements for registration, market conduct, compliance, cybersecurity, and sanctions.
This article is published on BitPinas: Striking a balance or going overboard? SEC’s proposed cryptoasset rules spark heated debates in the community
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