The Securities and Exchange Commission (SEC) has issued the draft rules of a new consumer protection law that would give regulators more teeth in going after perpetrators of financial crimes while recognizing cryptocurrencies as “securities” that would also fall under their ambit.
The draft rules were released for public comment, in line with Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act (FCPA).
According to the SEC, these would strengthen regulators by “providing them with rule-making, surveillance, inspection, market monitoring, and more enforcement powers.”
The proposed guidelines also seek to classify the once ambiguous nature of cryptocurrencies such as Bitcoin, Ether and similar “tokenized securities products” as securities.
“The draft rules will cover all financial products and services and financial service providers under the jurisdiction of the SEC. These financial products and services include credit, securities, and investments, including digital financial products or services which pertain to the broad range of financial services accessed and delivered through digital channels,” the SEC said.
The rules provide that the SEC would be able to stop financial service providers from collecting “excessive or unreasonable interest payments, fees, and charges.”
It could also disqualify or suspend directors, trustees, officers, or employees; impose fines, suspension or penalties and issue cease and desist orders to entities covered under the law.
It also defined monetary penalties for perpetrators of investment frauds.
“In case profit is gained or loss is avoided as a result of the violation of the FCPA or investment fraud, a fine not more than three times the profit gained or loss avoided may also be imposed by the SEC,” the corporate regulator said.
“In addition to the administrative sanctions that may be imposed, the authority of the financial service provider to operate in relation to a particular financial product or service may likewise be suspended or cancelled,” it added.
According to the SEC, persons who violate provisions of the FCPA or its rules would be punished by imprisonment of not less than one year, but not more than five years, or by a fine of not less than P50,000 but not more than P2 million, or both, at the discretion of the court.
Should the violation be committed by a corporation or a juridical entity, the directors, officers, employees responsible for such violation shall be held liable.
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