New SEC Requirement Philippines

The SEC requires sellers to register cryptocurrency cloud mining contracts as securities. The Philippine Securities and Exchange Commission (SEC) issued an advisory on April 10 in which it applied the Howey test to determine whether such contracts are securities.

According to the Howey test, an instrument is considered an investment contract if it meets the following three criteria: there is an investment, there is an investment in a common enterprise, and profits are expected to flow primarily from the activities of others. The test was developed in 1946 by the U.S. Supreme Court in the case Securities and Exchange Commission v. Howe.

Cloud mining contracts are covered by the securities laws because they are “investment contracts,” under which investors are betting on the mining capacity of a remote data center under the contract, which can then be resold.

In the advisory, the SEC requires that all brokers, dealers, sellers and others who promote investment in these contracts register them with the SEC or obtain a license to do so. Failure to comply with this requirement will be considered an “issuance of unregistered securities,” which carries a criminal penalty of 21 years in prison.

In late 2017, the SEC announced plans to regulate ICOs under the Securities Regulation Code. Earlier this year, the Philippines' central bank, the Bangko Sentral ng Pilipinas, recognized Bitcoin as legal tender and began accepting license applications from the country's cryptocurrency exchanges.

Central Bank Deputy Governor Melchor Plabasan explained that the country's financial regulators view cryptocurrency and related assets as both monetary and investment instruments.

Additionally, in March 2018, one of the Philippine senators filed a bill to introduce stricter regulations. sanctions for cryptocurrency crimes, including corruption, money laundering and terrorist financing.

According to https://cointelegraph.com