Philippines introduces radical crypto rules, Manders licenses and capital requirements

Crypto-asset service providers in the Philippines must now obtain licenses and adhere to strict disclosure requirements under what has so far been considered the most extensive digital assetarader in the country.

CASPs that are active in the country are obliged to register as local companies with a minimally deposited capital of ₱ 100 million (US $ 1.8 million).

The new guidelines, initially published on 30 May among the Philippines Sec memorandum circular no. 5came into force on Thursday.

Companies are also required to maintain physical offices, to separate customer assets from company ownership and to submit regular operational reports.

The supervisor would also require documentation on any digital active acts issued or maintained by a company to fully explain the functions, risks and underlying technology of the asset.

The step of the SEC is “a turning point” that “could create” in the short term response nuisances, especially for smaller players, “Nathan Marasigan, partner at MLAW Office, said Decrypt.

Although this can be the case in advance, the new guidelines “ultimately determined the scene for the regular acceptance of Crypto by setting up a regulatory regime where there was none,” Marasigan said.

The framework focuses on an enormous, largely unregulated market that affects millions of Filipino crypto investors, who finance Philippines Secretary Ralph Recto claimed Was tailor -made for around $ 107 billion.

Although the ₱ 100 million capital requirement is the standard for CASP registration, the SEC has provided a mechanism for possible exemptions, so that smaller companies can be considered based on specific criteria.

Nevertheless, the new guidelines can make technical requirements for performing crypto services more challenging, at least in the short term.

“From the perspective of the local companies there will be some substantial challenges in the implementation of the new CASP rules,” said Luis Buenaventura, head of Crypto at Finance Super app GCASH, said Decrypt.

Certain requirements of the SEC mandate “Customer data and order version” that must be stored “within the geographical boundaries of the Philippines”, which could imply that “cloud hosting such as AWS or Azure is discouraged,” explained Buenaventura.

“₱ 100 million Is not a significant amount if you plan to launch a crypto exchange in 2025. Customers expect robust apps with millisecond latency, and that is only possible with a generous amount of resources, ” Buenaventura added. “That said, the new framework would indeed create a competitive advantage for recognized players, especially since they have long been operated against their counterparts without a permit.”

Such a requirement can “make it unfeasible for international players to shop here without restructuring their technical stack,” he said.

According to the new rules, CASPs will be classified as covered entities that are subject to joint supervision by the SEC and the Anti-Money Laundering Council.

Operational requirements include transaction weakening systems, knowledge of your customer (KYC) procedures and quarterly reporting of administrative pin and risk assessments.

“Regulation is rarely perfect on the first day, but as long as the regulatory authority follows a progressive approach and remains open to refining the framework over time, I think this signals the intention of the Philippines to encourage growth and development in this sector,” Marasigan said.

Edited by Sebastian Sinclair