Public policy group Infrawatch PH is calling on the Securities and Exchange Commission (SEC) to close enforcement gaps on unlicensed crypto exchanges amid the recent launch of the Commission’s strategic surveillance and enforcement sandbox (StratBox).

The group said that while StratBox marks progress in cryptocurrency regulation, it must be paired with firmer efforts to close enforcement gaps that enable unregistered platforms to facilitate fraud and abuse.

This statement was issued even as the SEC announced that it has just issued new rules to regulate the marketing, issuance, and trading of crypto-assets, as well as the registration and operation of crypto-asset service providers (CASPs) in the country.

Infrawatch convenor Terry Ridon said StratBox, which allows licensed CASPs to test new products and services under regulatory supervision, is a timely move to promote innovation in the country’s digital asset ecosystem.

“The sandbox model supports innovation but only for regulated and licensed entities. The use of crypto for illicit activities remains rampant particularly on unregulated and unlicensed firms, and the government should crackdown on firms operating in the Philippine market,” he said.

StratBox, which opened applications in May, is designed to give registered crypto firms a controlled environment to develop and deploy digital financial products while allowing regulators to assess associated risks.

“If the SEC seeks strict compliance from licensed cryptocurrency exchanges, it should undertake stronger measures to crackdown on unlicensed exchanges operating in the Philippines, particularly through advisories warning the public against investing in these firms,” Ridon said.

Unlicensed platforms, he said, are often used to facilitate online scams, money laundering, and other illicit activities—many of which have already victimized Filipino users.

Ridon urged the SEC to work more closely with the National Telecommunications Commission (NTC) to implement access restrictions on illegal platforms—similar to the agency’s earlier move to block Binance from operating in the country without proper registration.

“Compliant players are subject to strict regulatory requirements, while unlicensed entities often operate with fewer restrictions, creating a distorted environment where non-compliance appears more profitable,” Ridon said.

He added that, “This sends the wrong signal to the market and undermines confidence in the regulatory framework.”

Ridon noted that any push to develop the digital asset sector must be grounded in a strong system of transparency, accountability, and law enforcement.

“An emerging crypto environment should be regulated by the government to protect the public interest and investor funds while allowing innovation to thrive.

“This means crypto entities working with the government through a regulatory framework which gives importance to transparency and accountability while allowing entities to create new products and services to fill various gaps in the market,” he said.