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The Philippine Securities and Exchange Commission (SEC) has released a draft of its “SEC Rules on Crypto-Assets Service Providers (CASP Rules)”, inviting public feedback. This initiative seeks to regulate the nation’s burgeoning cryptocurrency industry, which has experienced significant growth in recent years.
A Hotspot for Cryptocurrency Adoption
With a tech-savvy population and a median age of 25, the Philippines has become a global leader in cryptocurrency adoption. As over 562 million users worldwide engage with crypto-assets, the SEC aims to address risks like fraud and market manipulation while fostering innovation in the sector.
Key Highlights of the Draft CASP Rules
1. Scope of Regulation
The framework defines crypto-assets as digital representations of value that use distributed ledger technology (DLT). It will regulate activities such as:
- Trading
- Custody
- Public Offerings
2. Licensing and Compliance
Crypto service providers must:
- Register with the SEC.
- Secure licenses under strict standards, including compliance with the Financial Products and Services Consumer Protection Act (FCPA).
- Meet minimum capital requirements and other regulatory obligations.
3. Disclosure Requirements
Entities offering crypto-assets to the public must submit detailed disclosure documents to the SEC at least 30 days before marketing. These documents must include:
- The offeror’s profile.
- Underlying technology.
- Potential risks.
- Warnings about possible value loss.
4. Cybersecurity and AML Measures
The rules emphasize:
- Alignment with the National Cybersecurity Plan.
- Regular audits to combat emerging threats.
- Adherence to anti-money laundering (AML) laws.
- Prevention of insider trading and market manipulation.
Invitation for Public Feedback
The Philippine SEC has invited stakeholders to share their insights and suggestions on the draft rules. The feedback window remains open until January 18, 2025.
Why This Matters
The proposed CASP Rules position the Philippines as a forward-thinking nation in the crypto space. By balancing innovation and regulation, the framework ensures a safer and more robust ecosystem for crypto users and service providers alike.
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