As the cryptocurrencies gained popularity and acceptance among people, financial regulators were also keen to scrutinize the burgeoning asset class. Many regulators across the countries believe that given the volatility, crypto assets pose a threat to the traditional financial system and to retail investors. Given the skepticism, they often try to bring these assets within jurisdiction and control over the decentralized financial system intending to safeguard the industry.
Recently a financial regulator in the Philippines is reported to make similar efforts within new draft rules. Philippines Securities and Exchange Commission (SEC) is looking for ways to have authority over cryptocurrencies. In addition, it will also be taking over the control of the local crypto industry.
As reported, the securities regulator put forward for public comment draft rules relating to financial products and services which also cover cryptocurrencies and digital financial products.
The SEC said in a statement the draft rules will operationalize a newly signed law and give it “rule-making, surveillance, inspection, market monitoring, and more enforcement powers.”
The guidelines expand the definition of a security to include “tokenized securities products” or other financial products using blockchain or distributed ledger technology (DLT).
Other financial products, including digital financial products and services relating to those accessed and delivered through digital channels along with their providers, will also come under the SEC’s remit.
The ability to enforce securities regulations is similarly expanded. The SEC would be able to restrict service providers from collecting excessive interest, fees, or charges.
The regulator would also have the power to disqualify or suspend directors, executives or any other employee found to be in violation of the laws. It could also suspend a firm’s entire operation.
Local laws allow the SEC to create its own rules for applying legislation in its jurisdiction, the central bank of the Philippines and the country’s insurance regulator is also allowed to create rules to supplement related laws.
The latest development marks a continuation of the regulator’s heavy crackdown on cryptocurrencies.
In late December 2022, the SEC warned the public against using unregistered exchanges that were operating within the country claiming a number of exchanges were “unlawfully allowing” Filipinos to access their platforms.
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