Certain provisions in the Securities and Exchange Commission’s draft “Rules on Crypto-Assets Service Providers” could affect grants from global blockchain companies to local projects, warns crypto lawyer Atty. Rafael Padilla.
What’s the significance: If implemented, the regulations could pose challenges for local Web3 projects that depend on grants from international organizations to support community events and initiatives. (Read more: Community Should Feedback on SEC Crypto Asset Rules Draft)
- The crypto lawyer strongly urges the community to send feedback to the SEC to help shape its upcoming rules for crypto assert service providers.
- SEC can be emailed at [email protected]
- Crypto Draft Rules (Summary and Full Text)
Key details:
- The January 8 episode of the BitPinas webcast discussed the implications of the SEC’s proposed “Rules on Crypto-Assets Service Providers” with crypto lawyer Rafael Padilla, hosted by BitPinas editor-in-chief Michael Mislos.
- During the webcast’s Q&A session, Atty. Padilla addressed the potential impact of the proposed draft on grants received by local web3 communities from international organizations.
- These grants often sponsor events and other community initiatives.
- The question concerned the specified regulations within the marketing and promotions section of the draft.
Review: Marketing and promotions section of the draft rules:
- Any form of offer, inducement, endorsement, solicitation, promotion, or advertisement may qualify as Marketing regardless of the media or channel through which it is made, and which may include, but is not limited to the following:
- Communications, publications, dissemination of any form of data, information, or content that is promotional, influenced and/or sponsored material;
- Social media posts, blogs, comments, non-written communications, banners, billboards, videos, podcasts, recordings or live streams;
- Events held in the Philippines which may facilitate the solicitation of clients or incentivize the use of any product and/or service related to any CASP Activity and/or the acquisition or disposal of any Crypto-asset;
- Advertisements, sponsored editorials, paid or earned media, and all forms of publicity-driving content or materials including branding and merchandise;
- “Airdrops” or the issuance, giving or transfer of a Crypto-asset; and
- Educational content including articles, papers, presentations, discussions and tutorials, whether online, off-line, audio and/or visual.
- No person shall communicate, offer, induce, solicit, promote, advertise, or deliver crypto- assets services unless registered as a CASP or an authorized third-party service provider.
- All forms of marketing or promotion of crypto-assets or services to the public must be in plain, clear, and concise language, that accurately and sufficiently disclose the product or service provided as well as the associated risks in a manner that is not misleading in both substance and presentation.
- A CASP shall be responsible for the acts or omissions of its directors, trustees, officers, employees, or agents in marketing crypto-assets or crypto-asset services. The CASP shall be solidarily liable with its authorized third-party service providers for acts or omissions in the marketing of products or services.
- A CASP shall disclose and submit to the Commission a list of its authorized third-party service providers that it has engaged for marketing and promotional activities. The entries in the list shall include the third-party provider’s name/s, mode or method of marketing and promotion, verified contact details, and other information as may be required by the commission.
The Commission shall have the authority to require their respective supervised CASPs and their third-party agents/service providers to submit reports or documents as needed.
Key takeaways on the discussion:
- The Philippines may struggle to gain support from global organizations for local web3 programs.
- Atty. Padilla urges the community and industry to speak up to ensure the SEC hears their concerns about the proposed policy.
- He emphasizes that the SEC should regulate only securities, securities-related transactions, and intermediaries, not Web3 projects unrelated to securities.
- The proposed rules, if approved, could discourage funding and support for local Web3 projects and developers.
- Padilla encourages taking action by submitting comments to the SEC until January 18.
Key quote:
“I’ve said this several times: The SEC should only regulate securities, securities-related transactions, and securities intermediaries. If the top Web3 projects aren’t involved in anything securities-related, why should they be covered by these rules? Again, these proposed rules, if approved, will cast a wide net that includes these projects, and as a result, it might discourage funding or support for local projects and local developers. But take action.”
Atty. Rafael Padilla, Crypto Lawyer
Moreover: He added that he plans to submit his comment focusing on the need to narrow the scope of the proposed rules to cover only crypto assets related to securities.
“I intend to write my comment focusing solely on this issue. My only concern, and what I hope the SEC will understand, is the need to revise the scope of these rules. They should scale it back to cover only crypto assets that are securities, securities-related transactions, and crypto asset securities intermediaries.”
Atty. Rafael Padilla, Crypto Lawyer
Zooming out: The Philippine SEC released draft rules for crypto-asset service providers to regulate the growing crypto industry.
- The draft rules detail licensing, compliance, marketing, cybersecurity, anti-market manipulation, and penalties.
Accordingly: BitPinas released two articles detailing the draft in summary and full context.
Further: After the release of the news, the SEC’s draft rules for CASPs received mixed reactions from the local web3 community. Some members praised the potential for increased transparency and consumer protection, while others found the rules restrictive, burdensome, and stifling to innovation.
Worth reading: During the same webcast, Atty. Padilla also urged the community to take part in the public consultation process to ensure that the regulatory landscape in the Philippines fosters innovation and growth while protecting the interests of all stakeholders.
This article is published on BitPinas: Crypto Lawyer: SEC Draft Rules May Impact Local Blockchain Grants
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