A law directly addressing digital assets is needed so that the Securities and Exchange Commission (SEC) will be a more efficient regulator, Chairman Emilio Aquino said during a meeting with the Senate Committee on Banks, Financial Institutions and Currencies. The law, if passed, will give the Commission jurisdiction and appropriate powers to accomplish this.
The said meeting was attended by Fintech Alliance PH, Binance, Cagayan Economic Zone Authority (CEZA), Bangko Sentral ng Pilipinas (BSP), and Securities and Exchange Commission (SEC), and discussed the Senate Bill 184 or the Digital Assets Act and Senate Resolution 126 on cryptocurrencies and other digital assets.
According to Aquino, SEC was only able to shut down investment scams that are considered as investment solicitations that violate the Securities Regulation Code, insisting that they do not have the appropriate power to control other cybercrimes that involve digital assets.
Some of the most common cybercrimes are identity theft and selling of e-wallets and other online accounts to criminals as well as money laundering.
So to lessen these kinds of cybercrimes, SEC announced with Google that they will require crypto advertisers to present a license to operate in the country.
One of the investment scams that the Commission shut down was Forsage and Forsage Philippines, after it ordered a Cease-and-Desist Order against the entity.
This move was recognized by the SEC of the United States of America after the US SEC charged some individuals that are involved in the scam that is identified as “a fraudulent crypto pyramid and Ponzi scheme.”
Timeline of Events:
- (October 2, 2020) – PH SEC Issues Cease and Desist Order to Forsage and its Promoters
- (August 2, 2022) – US SEC Cited Local Counterpart Over Forsage Cease-and-Desist Order
- (August 4, 2022) – PH SEC Hails US SEC’s Move to Charge Forsage Scam Leaders
In an article written by Atty. Rafael Padilla, he emphasized that a law or an act of Congress is needed to fill the regulatory gap concerning Virtual Asset Service Providers (VASPs).
Companies that are recognized as VASPs are those that facilitate exchange between virtual asset and fiat currencies, virtual asset to virtual asset, custody or transfer of virtual assets. They are recognized through acquiring a VASP License to the Bangko Sentral ng Pilipinas (BSP).
- How to Get a VASP License in the Philippines for Crypto Exchanges
- BSP Imposes Ban on VASP License Application
“I think there’s a regulatory gap on who should regulate certain VASPs because some categories neither fall within BSP nor SEC’s regulatory ambit. This gap can’t be simply filled by administrative rules and requires statutory clarity from Congress,” Padilla said.
The lawyer published the article after infrastructure think tank Infrawatch PH sent three different letters to the BSP, SEC, and the Department of Trade and Industry (DTI) to ban global exchange giant Binance for operating without the VASP license in the country.
In a response letter obtained by BitPinas, the SEC confirmed that Binance is not a registered corporation or partnership in the country: “Consequently, Binance does not possess the necessary authority and or license to solicit investments as only registered corporations can apply for and be issued the necessary licenses to solicit investments.”
“Considering these circumstances, we caution the public not to invest with Binance,” the letter read.
Binance representatives – General Manager for the Philippines Kenneth Stern and Head of Asia Pacific Leon Foong were present in the Senate hearing. Stern said the company is aligned with the SEC and the BSP in making sure there is a safe environment around crypto in the Philippines.
Timeline of Events:
- (June 8, 2022) – CZ visited the Philippines and talked to PH Media re: Binance expansion
- (June 8, 2022) – CZ said they intend to obtain a local crypto license
- (June 9, 2022) – Then Finance Secretary Dominguez said Binance is not yet registered and they are monitoring it
- (June 10, 2022) – Binance Scholarship for Filipinos
- (June 15, 2022) – Infrawatch PH sent a letter to the BSP asking it to ban and suspend the exchange for illegally operating here.
- (June 16, 2022) – Binance responds: “We are open to discussions”
- (June 16, 2022) – Binance is hiring 2,000 more people
- (July 7, 2022) – Infrawatch Letter to DTI
- (July 7, 2022) – Binance Answers New Infrawatch Letter
- (July 11, 2022) – DTI Responds
- (July 26, 2022) – Infrawatch sends letter to SEC
- (August 4, 2022) – SEC responds
Currently, some of the major players in the industry that holds a VASP license are PDAX, Coins.ph, Maya, and Moneybees. There are 19 VASPs according to the BSP as of June 30, 2022.
This is not the first time that a Senate Bill (SB) was filed to recognize digital assets, last 2019, Senator Imee Marcos filed SB 1041 – An Act Recognizing Digital Assets, Requiring the Registration of Digital Asset Enterprises, Their Operators, And for Other Purposes.
Last year, the Commission confirmed that they have finalized the rules for digital asset offerings (DAO) and digital asset exchanges (DAX) this year.
Though it was not mentioned if the meeting will happen again, the Senate Committee on Banks, Financial Institutions and Currencies already ordered the formation of a technical working group to help craft the Digital Assets Act.
“These criminals are more innovative, and are more responsive to policy and to regulation. Meaning they study the regulation, they study technology, they study the loopholes, and they manage to evade regulation and policy. Masyado tayong mabagal in other words,” said Senator Shervin Gatchalian, the Committee Vice Chairman.
A few days ago, Representative Joey Salceda, Chairman of the Ways and Means Committee, refiled the Digital Economy Value Added Tax (VAT) Law. According to him, the House Bill (HB) 372 was filed as a means to “close ambiguities” pertaining to Value Added Tax (VAT) and tax laws, he also expressed his plans to create a group that would study the possibility of taxing digital assets.
This article is published on BitPinas: SEC: Law Focusing on Digital Assets Needed
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.