Philippine SEC

The Philippine Securities and Exchanges Commission highlighted that it’s illegal to offer Filipinos access to unregistered exchanges.

After the height of the FTX collapse, the Philippine government warned investors within the country about using unlicensed crypto exchanges. 

The Securities and Exchanges Commission (SEC) in the Philippines issued an advisory to the public against using unregistered cryptocurrency exchanges that are operating within the country. Within the warning, the SEC did not directly mention the FTX exchange but said that the warning considers “the recent collapse of a large international cryptocurrency exchange.”

Citing the laws within the country, the government agency reiterated that any entity intending to conduct business within the country is required to register with the SEC. They wrote:

“SEC is the registrar and overseer of the Philippine corporate sector; it supervises more than 600,000 active corporations and evaluates the financial statements (FS) filed by all corporations registered with it.”

According to the SEC, a number of exchanges are targeting Filipino investors through advertisements online and through social media. The government agency also highlighted that the exchanges are currently “unlawfully allowing” Filipinos to access their platforms and enable the creation of accounts online. The SEC wrote that these exchanges “offer different products and schemes which are high-risk and sometimes fraudulent.”

Related: Philippines to explore blockchain use cases, launches training program

On Aug 4, the SEC singled out the Binance crypto exchange and warned local investors to not use the crypto trading platform. According to the SEC, the exchange is not licensed to solicit investments. Despite this, the exchange remained positive that they will be able to penetrate the country.

On Aug. 19, the Banko Sentral ng Pilipinas (BSP), the country’s central bank, issued a similar warning to local investors. The BSP urged Filipino citizens to refrain from using foreign virtual asset service providers that are not registered locally and are based abroad. According to the central bank, it would be difficult to enforce any consumer protection mechanisms and legal recourse when dealing with such businesses.

Infrawatch PH Convenor Terry Ridon said that the SEC’s response clarifies the government’s position on crypto platform operations.

The Philippine Securities and Exchanges Commission (SEC) cautioned the public not to invest in the crypto exchange Binance in their response to policy think tank Infrawatch PH’s attempts to woo the SEC to take action against the exchange. 

In a letter sent by SEC Director Oliver Leonardo, the public was advised to refrain from investing in the exchange. Additionally, the SEC noted that Binance is not a registered corporation based on the initial assessment. Leonardo wrote:

“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.”

The letter highlighted that Binance is violating laws like the Securities Regulation Code and the Revised Corporation Code enforced by the SEC. Because of this, the SEC also mentioned that if there are any victims, it encourages them to come forward and file their complaints against the exchange.

Infrawatch PH Convenor Terry Ridon commented on the issue that this clarifies the government’s position on crypto platform operations. “This advisory provides immediate protection to Binance users who may have lost their money investing in an unlicensed platform,” he said.

In a statement, Binance told Cointelegraph that they were aware of the letter sent by the SEC to Infrawatch PH and that they align with the SEC’s mission to protect users. According to a spokesperson from the exchange, they are open to dialogue with the SEC. They explained that Binance believes in developing regulatory frameworks that evolve with innovation. Binance said that:

“We encourage the growth of positive innovations such as blockchain and look forward to having open dialogue with the SEC and any other industry participants that share our vision of financial inclusion and empowerment.”

In June, Binance expressed its intention to get the virtual asset service provider (VASP) license and e-money issuer license in the Philippines. Binance CEO Changpeng Zhao expressed that the exchange is interested in expanding its operations within the country.

Related: Binance gets VASP registration for its Spanish subsidiary from the Bank of Spain

In the same month, Infrawatch PH started its efforts against Binance by reaching out to the Philippine central bank. Additionally, the lobbying group also made efforts to ask the country’s Department of Trade and Industry (DTI) to ban Binance over alleged illegal promotions. However, the DTI responded that they are unable to enforce any ruling on the exchange.