MANILA - The Securities and Exchange Commission and the Bangko Sentral ng Pilipinas are seeking clearer regulations on digital assets to protect consumers.
This was raised during a meeting with the Senate Committee on Banks, Financial Institutions and Currencies as lawmakers, financial firms and regulators convene to discuss Senate Bill 184 or the Digital Assets Act and Senate Resolution 126 on cryptocurrencies and other digital assets.
Some of the most common cyber crimes involving digital assets include identity theft, the selling of e-wallets and other online accounts to criminals as well as money laundering
SEC Chairman Emilio Aquino said they were able to shut down investment scams but only those considered investment solicitations that violate the Securities Regulation Code.
Aquino said a special law directly addressing digital assets is needed to make the SEC a more efficient regulator, and the law must give the SEC jurisdiction and the appropriate powers to accomplish this.
Meanwhile, the BSP said it also needs clear rules defining what it can do to protect owners of virtual assets and customers of virtual asset service providers or VASPS.
The BSP has no power to regulate foreign VASPS which offer services to Filipinos, and it does not have clear rules on non-fungible tokens, NFT marketplaces, and decentralized finance such as cryptocurrency lending.
The BSP is pushing for legislative proposals to regulate digital assets, including the Financial Accounts Regulation Act which features the criminalization of the sale of financial accounts for use as "money mule", and other acts of identity theft such as phishing and social engineering schemes.
The BSP said it also supports proposals to enforce the registration of sim cards.
Meanwhile, the Fintech Alliance Chairman Lito Villanueva said the industry is also supporting the Digital Assets Act.
"The Alliance supports risk-based regulatory regime putting consumer protection at the core. One of which is providing for mechanisms aimed at registration and regulations of emerging technologies such as digital assets," Villanueva said.
"We look forward to having risk-based regulations without stifling innovations for inclusion. There must be more clarity on the rules of engagement for emerging technologies such as non-fungible tokens or NFTs, NFT marketplaces, decentralized finance, and exchange traded funds or EFTs, among others," he added.
The group said the BSP and the SEC should be stricter in licensing of digital assets exchanges to protect investors.
The committee ordered the formation of a technical working group to help craft the Digital Assets Act.
As the adoption of digital payments and assets accelerated during the COVID-19 pandemic, policies should be able to keep up with the digital uptake, according to Senate Committee on Banks, Financial Institutions, and Currencies Vice Chairperson Sherwin Gatchalian.
"These criminals are more innovative, and are more responsive to policy and to regulation. Meaning they study the regulation, they study technology, they study the loopholes, and they manage to evade regulation and policy. Masyado tayong mabagal in other words," Gatchalian said.
“These guys know the weaknesses of policy and regulation. I just want to encourage the regulators to stay ahead of the curve," he added.