SEC Releases Proposed Rules on Digital Asset Exchange
The Securities and Exchange Commission (SEC) issued the proposed rules on Digital Asset Exchange (DAE) on Tuesday, July 16, inviting brokers, dealers, investment houses, investment public, and other interested parties to submit their views, comments, and inputs on the contents of the draft.
The proposed “Rules on Digital Asset Exchange” will primarily govern the registration and operation of an exchange where digital assets are traded on an online platform accessible in or from the Philippines.
DAEs conducted through other means or media other than online electronic platforms are outside the coverage of the rules — hence the requirements under the Securities Regulation Code (SRC) will still apply to them.
The issuance defines “digital asset” as a digital representation of value that is used as a medium of exchange, unit of account or store of value. It is not considered a legal tender, whether or not denominated in legal tender. It is intended to represent assets such as debt or equity in the promoter as well as provide access to an application, service or product by means of blockchain.
It also defines “digital asset exchange” as an organized marketplace or facility that brings together buyers and sellers of digital assets.
Required to act as a self-regulatory organization, a DAE shall have the power to implement its own rules and regulations, including but not limited to defining its structure, trading in its platform, price discovery, clearing and settlement procedures.
All persons or entities that will form or operate as a DAE should be duly incorporated under the SRC and its Implementing Rules and Regulations or under the laws of another jurisdiction.
Individuals seeking to register a DAE are required to maintain in fiat form an initial paid-up capital of at least P100 million. The DAE is required to hold regulatory capital equivalent to 12 months of operational expenses.
SEC’s request for public comment will be open until August 14.