Philippines Needs More Time To Release Crypto Safeguards After FTX Debacle

The Philippines is postponing the release of guidelines set to govern the growing crypto industry in the country. The Philippine financial market regulator has said that it needs more time to come up with robust frameworks that will protect crypto investors, especially after the bankruptcy of the FTX exchange.

The Philippines needs more time to release crypto safeguards

The Chairman of the Philippines Securities and Exchange Commission (SEC), Emilio Aquino, has said that the postponement of the release of these new safeguards will allow for more time to figure out the best protection measures for those investing in crypto assets.

Aquino has also said that work on the guidelines needed for the sector was still ongoing. He noted that it was likely that the proposed legal framework would still be released during the year. However, the framework will only be released after the regulator has assessed the reasons that prompted the collapse of FTX late last year.

“We were supposed to bring it out late last year, but we don’t want people to get burned. The issuance of digital assets is a form of capital raising, and we have to study that because, like in FTX, they were transferring billions left, right, and center,” Aquino said.

The FTX cryptocurrency exchange filed for bankruptcy in November last year. Before its demise, FTX was ranked as one of the largest crypto exchanges in terms of trading volumes. However, revelations that the exchange transferred customer funds to sister hedge fund Alameda Research triggered a run on deposits that led to bankruptcy.

The founder and the former CEO of FTX, Sam Bankman-Fried, was arrested in the Bahamas and later extradited to the United States, where he is facing multiple counts of fraud and conspiracy. Bankman-Fried’s trial is slated for October 2023.

The collapse of the FTX cryptocurrency exchange caused huge losses to crypto investors that held money on the exchange. It is estimated that the exchange owes billions of dollars to customers. The entire issue has now forced the Philippines to tighten its regulatory framework around crypto assets.

Philippines tightens crypto regulations

Last month, the Philippine SEC issued a warning against a cryptocurrency derivatives platform that was available in the country. This product was launched by the Gemini cryptocurrency exchange as it sought to expand operations beyond the US.

The Philippine SEC sent out a regulatory notice saying that Gemini Trust Company, the parent company behind the Gemini exchange, was not a registered entity. The commission said that Gemini was operating in the Philippines without a license. The Gemini exchange launched an international derivatives exchange outside the US, and the Philippines was among the countries where the platform was launched.

Binance, the largest cryptocurrency exchange by trading volumes, is also facing challenges in offering crypto services in the Philippines. The Binance exchange is planning to secure two licenses in the Philippines. The first is the virtual asset service provider (VASP) license, while the second is the Electronic Money Issuer (EMI) license.