SEC prepares rules for digital asset exchange

Published August 2, 2021, 7:00 AM

by James A. Loyola

The Securities and Exchange Commission is preparing rules governing digital asset offerings (DAO) and digital asset exchanges (DAX) to provide the investing public with more options, as well as protect them from the misuse of such emerging assets.

“As it supports new and emerging business concepts, the Commission is cognizant of the risks that come with innovations,” said SEC Chairperson Emilio B. Aquino.

He added that, “To manage the risks, the Commission embeds safeguards in every policy action and further intensifies its enforcement and education campaigns to protect not only investors and other financial consumers, but also the integrity of the business sector.”

During a virtual press briefing, SEC Associate Commissioner Kelvin Lester K. Lee said the rules for both DAO and DAX are undergoing revisions and the commission has asked the public for comments that will be considered in the drafting of the new rules.

He noted that, while the current demand in the market is for crypto-currencies and initial coin offerings, the SEC has decided to broaden its rules to include all digital assets as the landscape is still evolving.

Aquino said they aim to finalize the rules within the year to a digital asset exchange can be established while prospective issuers can start planning digital asset offerings.

“The SEC remains committed to adopting to the times, encouraging the Fintech landscape to grow, and cooperating with our stakeholders on the needed synergy to ensure that the financial and business sector, in particular Fintech, continues to not just survive, but to thrive in the Philippines,” said Lee.

In 2019, for instance, the Commission issued SEC Memorandum Circular No. 18, Series of 2019 to define and prohibit unfair debt collection practices amid increasing complaints against online lending operators.

It also issued SEC Memorandum Circular No. 19, Series of 2019 to require financing and lending companies to register their online lending platforms. 

The SEC likewise supports innovation and risk management by adopting global best practices and participating in global development initiatives as member of international organizations such as the Global Financial Innovation Network (GFIN).