Capital req’ts under SEC crypto guidelines may discourage small players

THE NEW GUIDELINES of the Securities and Exchange Commission (SEC) on crypto-asset service providers (CASPs) might discourage smaller players due to steep capitalization requirements.

- By Revin Mikhael D. Ochave Reporter

Corporations interested in becoming CASPs should register with the corporate regulator and must have a minimum paid-up capital of at least P100 million in cash or property, excluding crypto-assets, based on SEC Memorandum Circular No. 5 that contained guidelines on the operations of CASPs.

Under the rules, a corporation is required to show proof that it has met the minimum capital requirement and that it has sufficient financial resources to “ensure that the business is resilient.”

A corporation also needs to apply for a license with the SEC to operate as a CASP.

Jiro Luis S. Reyes, chief executive officer at crypto education platform Bitskwela, said the capital requirement is “overregulation.”

“The P100-million capitalization required for CASPs stands as a major problem for most builders in the Philippines. This is overregulation in my opinion. There should be tiers to this at the very least,” he said in a Viber message.

“Since the CASP rules cover any CASP, this could technically mean that anyone who wants to build a homegrown Pinoy Web3 product would need to meet the P100 million,” he added.

Mr. Reyes said the high capitalization requirement might push smaller Filipino companies to consider establishing their platform in other countries.

“This would probably mean that Filipino builders would just choose different markets or countries to launch in, resulting in less innovation for us,” he said.