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A toothless regulator

Manila Standard

All bark, no bite.

This doggone cliché may well apply to certain state regulators with a fondness for dishing out press releases but short on action in the discharge of their mandated tasks, and therefore get away with murder, so to speak.

Let’s talk about the Securities and Exchange Commission, with particular focus on the cryptocurrency giant Binance, that has been encountering near-fatal debacles on many fronts.

Offhand, let’s give credit where credit is due.

It is admirable that in November last year, the SEC boldly announced its intent to ban Binance as it is not a duly registered corporation with permits to do business in the Philippines as a cryptocurrency exchange.

Here’s a direct quotation from the SEC’s advisory: “This is to inform the public that the online cryptocurrency exchange BINANCE is NOT AUTHORIZED TO SELL or OFFER SECURITIES to the public in the Philippines.”

If that is not crystal-clear enough, we don’t know what is.

The SEC advisory holds criminally liable and imposes stiff penalties (up to P5 million and/or imprisonment of 21 years) on those who act as “salesmen, brokers, dealers or agents, representatives, promoters, recruiters, influencers, endorsers, and enablers of the Binance platform in selling or convincing people to invest in this platform within the Philippines.”

As of writing, however, Binance continues to offer securities and is still available to be downloaded from app stores. Last we checked, this is a clear violation of our laws.

According to SEC Chairman Emilio Aquino, it really meant to ban Binance but had to put it off on account of changes in its ranks.

With all due respect, that’s as flimsy as an excuse could get. The SEC also says it is delaying the ban to allow local investors to withdraw their exposures.

But how long does it actually take for an investor to withdraw his money?

For tech-savvy crypto investors—this takes anywhere from a few seconds to a couple of days.

It’s been four almost four months now since the SEC flagged Binance’s illegal operations in the country, and nothing definitive has been done about it.

Without doubt, the SEC has certain police powers to maintain the integrity of our capital markets and credibility of our securities laws.

Ergo, it can initiate legal proceedings motu proprio against Binance or request the National Telecommunications Commission (NTC) to block its website.

Regrettably, this is where the bite is lacking.

What is baffling is the SEC has implemented bans on similar unregulated cryptocurrency exchanges like MiTrade and OctaFx, with way fewer Filipino users. Is there favoritism towards the world’s biggest exchange?

No less than the United States has set the precedent on how to apply the law against Binance.

Are we too compassionate to a fault?

We hope not.

However, running after Binance is not the task of the SEC alone.

This should be a collaboration with other agencies such as the NTC, the Bangko Sentral ng Pilipinas, the Anti-Money Laundering Commission, and the Department of Trade and Industry at the very least.

We need to see some action here, definitely.

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