Lawmakers in the Philippines are considering how to formulate and implement regulations for the digital asset industry. In a recent Senate committee hearing, lawmakers tasked the nation’s top financial regulators with how they protect investors in digital assets and their plans for the future.
Tuesday audience by the Committee on Banks, Financial Institutions and Currencies brought together officials from the Bangko Sentral ng Pilipinas (BSP) as well as the Securities and Exchange Commission (SEC), headed by SEC Chairman Emilio Benito Aquino. Stakeholders from the digital asset industry, including digital currency-focused exchanges and law firms, were also present at the hearing.
The Philippine government is working to digitize the payments industry, a BSP official told attendees. Today, 90% of government disbursements are made digitally. However, the share of digital payments made to government by ordinary citizens is less than 10%, while only 34% of business payments to government are digital.
On digital assets, it is the SEC that has been most heavily involved in regulation. However, as Aquino revealed, the commission’s authority is limited to projects that qualify as investment contracts.
The SEC has faced several challenges in its regulation of the industry, Aquino added. These include the anonymous nature of some digital assets and the prevalence of scammers in the industry. He said many investors piled on the hype and ended up losing all their money. Quoting US SEC Chairman Gary Gensler, he called the industry a “wild west”.
Aquino defended the SEC’s jurisdiction over the sector, noting that securities laws give it a mandate to “promulgate rules for the registration and licensing of innovative and other marketplaces or exchanges covering innovative titles”.
The agency regulates the sector in three ways:
- Establishment of licensing regimes specific to digital assets.
- Changes to existing regulations by adding specific requirements for digital assets.
- Prohibition of certain activities related to digital assets.
Other proactive steps it has taken include issuing more than 50 reviews over the past five years against scammers posing as digital asset companies. It has also partnered with Google to block some misleading ads.
One of the best examples of the SEC’s success in this area is with Forsage, the chairman told the committee. The agency called Forsage 2020 a scam targeting Filipinos and ordered it to cease and desist. A month ago, the US securities regulator indicted 11 people behind Forsage for the pyramid scheme. Gensler’s agency praised the Philippine SEC for fuming Forsage and helping with the investigation, a win for Aquino and his team.
Going forward, Aquino’s highest priority is to issue rules for exchange and digital offerings. Conducting a massive investor education campaign and sharing information with the Bureau of Internal Revenue (BIR) are also high on its priority list, he added.
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