PH SEC Alert: Crypto Trading Platforms Required to Enroll Before Providing Securities

In a recent development, the Securities and Exchange Commission (SEC) of the Philippines has again stressed the importance of regulatory compliance for organizations seeking to offer securities in the country.

The assertion comes in the wake of an advisory issued concerning Gemini Exchange, one of the prominent crypto firms. Kelvin Lester Lee, the SEC Commissioner, has stated that registration is crucial for any organization intending to offer securities within the country.

The insights of Commissioner Lee regarding Gemini Advisory

The Advisory on Gemini Exchange was viewed by Commissioner Lee as a measure towards securing the investment landscape in the country. “The main objective of the Commission is to ensure the protection of investors. We are opposed to unlicensed and unregistered entities operating within the Philippines”.

The investigation concerning Gemini's offerings was conducted by the Enforcement and Investor Protection Department (EIPD) of the SEC. The inquiry findings were encapsulated in the advisory issued.

The advisory issued by the Securities and Exchange Commission (SEC)

Gemini Foundation, the non-U.S. derivatives platform of Gemini Exchange, received a warning from the SEC just two weeks after its launch. The reason cited was the crypto firm's offering of Gemini Derivatives in the Philippines without possessing the necessary licenses and registration.

The Commission underscored that the distribution or sale of securities without appropriate registration is deemed illegal in the country. Gemini's operations thus fall under the purview of Section 8.1 of the Securities Regulation Code (SRC), as they violate the regulations stipulating mandatory registration and approval of securities, inclusive of derivatives, by the SEC. Further, the SRC defines that a license from the SEC is mandatory for offering derivatives within the country.

In addition to this, Gemini's public announcement about the offering of derivatives in the Philippines is seen as a violation, as it qualifies as a public solicitation. As per the implementing guidelines and rules of the SRC, various forms of communication like advertisements on different platforms, distribution of brochures or flyers, or other methods of disseminating information are classified as public solicitation.

About Gemini Foundation？

On May 4, 2023, Gemini Exchange unveiled the Gemini Foundation in the Philippines and 29 other countries and regions. Regulatory hurdles in the U.S., including lawsuits from both the CFTC and SEC over alleged securities infringements, prompted Gemini to launch the platform outside the United States.

Nevertheless, entities in the Philippines are obligated to acquire licenses from the SEC for derivatives and a VASP license to facilitate transactions from crypto to fiat. In light of the advisory issued by the SEC, Gemini has lately removed the Philippines from its list of countries offering derivatives, as displayed on its website.

About Commissioner Lee？

Kelvin Lester Lee, the SEC Commissioner, also manages the Markets and Securities Regulation Department (MSRD) and the Information and Communications Technology Department (ICTD). Furthermore, he was instrumental in the creation of the International Affairs and Protocol Division (IAPD), currently under his supervision. Lee is also in charge of the PhiliFintech Innovation Office (PhiliFiNNO) within the Commission.

Lately, Lee has received recognition for his outstanding leadership in propelling fintech innovation in the Philippines, winning two esteemed international awards. From over 800 nominations in the region, Lee received the Gold Stevie Award for Thought Leader of the Year at the 10th Annual Asia-Pacific Stevie Awards. The Asian FinTech Academy (AFTA) recognized him as an Exceptional FinTech Regulatory and Innovation Leader at the Asian Digital Finance Forum & Awards. These accolades underscore his substantial contributions and influential role in the fintech sector.

Get the WikiFX App on your mobile device for the most recent updates. You can download the App from this link: https://social1.onelink.me/QgET/px2b7i8n