SEC Clarifies CASP Rules to Web3 Community: Here’s What to Know

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Are crypto content creators really required to secure license as financial advisors?
Are airdrops considered as investment schemes? 
Are NFTs measured as securities? 
Are DeFi projects really exempted to the rules? 
Are staking mechanism under securities regulation? 

The Securities and Exchange Commission (SEC) clarified key aspects of its newly issued Crypto Asset Service Provider (CASP) rules in a livestream discussion.

The session, titled “How the SEC CASP Rule Impacts Crypto & Web3 KOLs and Educators: Is Your Crypto Content Still Safe?”, featured SEC Assistant Director Atty. Paolo Ong, and was hosted by Fermin Barrenechea III, the co-founder of web3 education platform Museigen.io, and James Genove, also known as The Resistance Trader.

The conversation aimed to address the implications of the CASP Rules for key opinion leaders (KOLs), content creators, and educators in the Philippine crypto space.

Upcoming SEC Crypto Financial Advisors Rules

According to Ong, the CASP rules primarily apply to crypto asset service providers and platforms, not individual traders or educators. 

He explained that if a CASP hires individuals or promoters to help market or promote their services, those promoters do not need to get a separate license or certification for financial advice. This is because their activities are covered under the CASP’s license. 

• In short, the responsibility and regulatory oversight fall on the CASP, not directly on the individual promoter, as long as the promotion is done on behalf of a licensed CASP.

However, the SEC representative noted that the SEC is currently drafting a separate set of rules that will specifically cover financial advice and advisory services related to digital assets. 

• Once the advisory rules are in place, individuals giving investment advice independently, not under a CASP, may be required to obtain certification.

“There is another set of rules being drafted by another department within the SEC, which is focusing on financial advisors. So we are just waiting for that to be issued so that everyone will be guided. But the framework will be there, and it is implementing the provisions of the Financial Consumer Protection Act, which provides the standards for investment advisors.”

Atty. Paolo Ong, Assistant Director, Securities and Exchange Commission

But How About Promotions?

Ong stated that recommending a registered CASP without payment may be acceptable, but directing users to an unregistered platform or receiving compensation could raise regulatory concerns due to potential conflicts of interest.

• Moreover, creators may receive compensation as long as it is deemed “reasonable,” such as free merchandise, but this too will be subject to SEC interpretation.

On the other hand, the SEC representative emphasized that only registered corporations, including One Person Corporations, are allowed to engage in promotional activities for crypto platforms; sole proprietorships and informal setups are not allowed to engage in promotion under the current rules. 

• This means that influencers or KOLs wishing to promote registered CASPs must do so under a corporate entity or a fully incorporated business.
• Ong reiterated that the corporation must be duly registered in the Philippines.
• In addition, only crypto services registered as CASPs with the SEC can be legally promoted in the Philippines.

Recently, several crypto influencers in the Philippines began purging or editing old posts to avoid potential regulatory violations, while trading education group ZFT suspended advisory services and restructured its operations to ensure compliance.

Clarification on Educational Content

Speaking about individuals who create crypto educational content without promotional intent, the SEC representative assured that they are unlikely to fall under the CASP rules, provided their actions are done in good faith:

• Educators who do not charge for access or promote specific platforms, especially those not engaged in affiliate marketing or shilling, are generally considered compliant under the current CASP framework.
• Accordingly, educational content, such as tutorials or non-promotional discussions about crypto, is allowed if done in good faith.
• However, the SEC will assess “educational content” on a case-by-case basis, as the guidelines do not explicitly define it, Ong expressed.

“In the subsequent sections of the provisions on marketing, you will see their content that is purely educational content. We understand that they have a benefit in the market, and they have a benefit to be published. So, we allow that, but the standard there is good faith. When you say good faith in legal terms, there is no definite standard: it is a case-by-case basis analysis.”

Atty. Paolo Ong, Assistant Director, Securities and Exchange Commission

DeFi and Non-Custodial Platforms

According to Ong, “truly decentralized” platforms, noted to be those with no identifiable controlling party, such as decentralized exchanges governed by open-source protocols and community governance, may not be covered by the CASP rules. 

“We understand that this is a very complex subject and we are aware of the decentralized applications.  If we are talking about truly decentralized platforms, we agree na hindi pa siya covered ng rules. But the question is, are the platforms truly decentralized? If it is really truly decentralized, how can you say it is decentralized? So, yun yung kailangan pang further clarification.”

Atty. Paolo Ong, Assistant Director, Securities and Exchange Commission

However, the burden of proving decentralization lies with the project or community.

• If a platform claims to be truly decentralized, it must demonstrate the absence of centralized control or a single entity responsible for updates or development.
• Any evaluation of decentralization will be conducted on a case-by-case basis, depending on the specific characteristics of the platform.

Airdrops and Token Rewards

For airdrops with no immediate or clear monetary value, Ong clarified that they are not automatically regulated, but they remain in a gray area under the SEC’s rules. 

• Token distributions, especially those tied to hackathons, educational events, or community-building initiatives, may be allowed, provided they are done in good faith and not used to raise capital or promise returns.

However, each case will be evaluated individually.

• The SEC representative stressed that what matters most is the context: if the airdrop is presented in a way that creates an expectation of future profit or is linked to a fundraising activity, even if the token currently has no value, it may be deemed an investment scheme and fall under securities regulation.

Staking and Investment Schemes

Meanwhile, staking as a consensus mechanism, such as Ethereum’s Proof-of-Stake, may not fall under securities regulation, especially if it is done directly by the user and not through a service provider, as Ong explained.

• Staking services offered by a CASP, even if based offshore, would require a license from the SEC if these services are being offered or marketed to users in the Philippines.

“Decentralized offshore na staking platform may not be covered. But it depends, kung it is used as part of the consensus mechanism nung crypto project that might not be considered as a collective investment scheme. But if it is being offered by a platform or a crypto asset service provider, then it would need a license from the SEC.” 

Atty. Paolo Ong, Assistant Director, Securities and Exchange Commission

Games and NFTs

The discussion was also able to clarify that Philippine-based game developers and startups are not required to have ₱100 million in capital just to develop a game or offer in-game NFTs.

• NFTs used solely as part of gameplay mechanics or for in-game ownership and trading are not subject to securities regulation.
• However, if those NFTs are sold outside the game, such as in external marketplaces, with the intent to raise funds or with a promise of future value, that may be considered a securities offering, thus falling under the Securities Regulation Code and requiring registration.

The SEC emphasized that fundraising activities tied to token sales, even if done by small startups, will be assessed on a case-by-case basis depending on how the tokens are structured and marketed.

• Pure in-game usage of NFTs, even if their value increases due to rarity or demand, is not an issue under the current rules.

Forex and Offshore Prop Firms

Lastly, he emphasized that SEC regulations primarily focus on crypto trading platforms operating in the Philippines, not individual traders or offshore proprietary firms.

• Offshore proprietary trading firms that contract Filipino traders to trade crypto or foreign exchange (forex) for them are not directly covered by the CASP rules.

“The focus of the crypto asset rules, the CASP rules, is on the trading platform, not on the trader. It focuses on crypto platforms that are offering services in the Philippines.”

Atty. Paolo Ong, Assistant Director, Securities and Exchange Commission

On forex trading, Ong explained that spot forex and spot crypto trading on platforms such as MT4 or MT5 fall under the jurisdiction of the Bangko Sentral ng Pilipinas. 

• In contrast, margin trading, contracts for difference, and other financial derivatives involving crypto or forex fall under the regulatory authority of the SEC.
• However, he emphasized that the Philippines currently lacks a specific regulatory framework for financial derivatives, meaning that while these instruments fall under the SEC’s purview, they are effectively unregulated for now.

Read more about the CASP Rules here:

This article is published on BitPinas: SEC Clarifies CASP Rules to Web3 Community: Here’s What to Know

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