The Philippine Securities and Exchange Commission (SEC) has taken a major step towards regulating the country’s fast-growing digital asset industry by issuing draft guidelines for the Crypto-Assets Service Provider (CASP).
The rules entitled “SEC Guidelines for the Operation of the SEC Guidelines for the Operation of Crypto-Assets Service Providers (CASP Guidelines)” provide an overview of the strict terms and conditions for companies providing crypto assets during the trade process within the Philippines. Most notably, the guidelines introduce essential minimum payroll capital capital of P100 million ($1.75 million) to entities seeking to register as CASPs. At the same time, this draft allows for potential exemptions from registration, depending on the entities’ circumstances and public interest.
The SEC released the draft through the Philifintech Innovation Office, and invited comments from stakeholders until April 26th. The agency has made it clear that businesses operating in the Philippines that provide digital assets as part of their services must comply with these upcoming CASP regulations. This public consultation period marks the important stages before guidelines are finalized and officially adopted.
Source: Securities and Exchange Commission Philippines/Facebook
Capital requirements to ensure market stability
The SEC appears to be intended to only put financially sound companies into the digital assets ecosystem to promote market stability and protect the interests of investors. Furthermore, the draft highlights that capital requirements will not only meet the 100 million PHP ($1.75 million) mark. The applicant must demonstrate that the business has the financial ability to continue operations, meet all obligations when incurred, and maintain sufficient resources to cover foreseeable or conditional liabilities. This indicates that financial resilience and long-term viability will become part of the SEC’s assessment process.
Comprehensive Documentary Requirements for Registration
To qualify as a CASP, the entity must be a formally registered company with an SEC, and have its primary purpose, and is expressly associated with digital asset services in its articles of association. The application process also includes submitting various documents under CASP Form 1. These include a list of digital assets and registration criteria, transaction and disclosure rules, business behavior policies, SEC approval to verify your bank account, and a detailed technical description of your software, hardware, and communications infrastructure.
Other requirements include information about custodians or registrars of digital assets, resolutions from the application authorized board of directors, resumes of key management and IT staff, copies of related licenses and contracts, a comprehensive risk disclosure matrix, and documents relating to our independent risk management unit.
Additionally, applicants must submit details of marketing and financial strategies, proof of submission of fee payments, details of trade liquidation and settlement procedures, and business plans from senior management to actively oversee risk management.
The SEC may grant exemptions based on the public interest
The draft has established strict registration guidelines, but leaves room for exemptions. Section 3 of the draft states that “the Commission may grant such exemption after an application for a CASP registration has been filed, and upon order determines that the order is consistent with the investor’s public interest and protection.” This discretion allows the SEC to exempt certain applicants from full compliance if it is possible to justify it under public interest considerations.
However, exemptions are not automated and must be formally applied. This draft does not currently outline the specific types of entities that may be subject to such generosity, suggesting that decisions will be made on a case-by-case basis.
Coordination with other regulators has been maintained
The proposed CASP guidelines also make it clear that they do not override the authority of other regulators, such as the Banco Central Ng Pilipinas (BSP), which oversees certain aspects of digital asset-related activities. This illustrates the multi-layered regulatory structure of the Philippines, requiring digital asset companies to navigate overlapping compliance regimes depending on the nature of their operations.
Industry Impact: Integration and Compliance
The Philippine SEC’s move to regulate the digital asset industry is in line with global efforts to introduce safeguards, protect consumers and strengthen market integrity. A high capital threshold could rule out companies that are undercapitalized, leading to greater integration within the industry, and perhaps in favor of more established players.
However, the flexibility offered through exemptions can benefit innovative or small businesses that can demonstrate responsible operations in line with the public interest and investor protection. This dual approach makes baseline requirements stricter, but is open to well-hearded exceptions, which helps create a more stable and dynamic digital asset environment in the Philippines.
Next Steps: Review and Finalize Guidelines
After the consultation period, the committee is expected to review its comments and complete the guidelines. According to the draft validity clause, the circulation will take effect 30 days after it is published in the General Cycle of the two newspapers. Introduction of these rules could greatly shape the future of digital regulations in the Philippines and impact how service providers operate and investors become involved in digital assets.
Watch: The Philippines is heading towards blockchain-enabled technology
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