SEC official tells public to exercise “due diligence” with crypto play-to-earn platforms

Securities and Exchange Commission (SEC) commissioner Kelvin Lee (Screenshot during Sept. 24, 2021 Laging Handa briefing)


(Eagle News) – An official of the Securities and Exchange Commission (SEC) advised the public to exercise due diligence when transacting with crypto or online platforms, including those involving play-to-earn platforms such as Axie Infinity.

SEC Commissioner Kelvin Lee said Axie Infinity for instance did not register as a business entity here in the country with the SEC, nor did it register to conduct investment solicitation.

Base po sa verification ng records po namin ‘no, they did not register po as a business dito sa SEC. Wala rin po silang secondary license ‘no to conduct regulated activity – meaning iyong mga investment solicitation, wala pa silang lisensya for that,” Lee said in a Laging Handa press briefing on Friday.

-Legal status of crypto sites still to be determined –

The SEC official, however, clarified that this does not mean that these crypto businesses are illegal just because they are not registered, but that the government is still “trying to determine their legal status under our current laws.”

“We are studying them all, iyong mga similar na crypto, mga online platforms, iyong mga play-to-earn… we’re trying to determine their legal status under our current laws,” Lee said.

Screenshot of the site play-to-earn site Axie

These entities are registered abroad and so the SEC is advising the public to be “more careful before they transact” business with these entities.

“So whether or not they are legal or illegal or need to register later on, that is something we still have to determine at the SEC,” he said.

Pero while we’re waiting for that determination po kasi, naglabas po kami ng advisory reminding everyone to be careful before you transact with iyong mga ganoon na entities kasi these are online entities but they are foreign registered, not registered here in the Philippines. So we are requesting the public to be more careful before they transact nga iyong mga ganito po,” Lee explained.

-Digital exchange rules-

He said that the SEC would come out with digital asset exchange rules, especially those involved in trading of cryptocurrency. These rules are expected to work out jurisdictional issues involving online platforms such as the play-to-earn sites.

“Pero siguro the question for us sa SEC, are these play platforms really considered as digital assets or securities. Iyon, hindi pa po clear kasi nga we’re still studying it,” he said.

Lee said that he would defer to the Bangko Sentral ng Pilipinas (BSP) with regards to jurisdictional issues concerning Axie or other online platforms.

Pero ang last meeting po namin and I think iyong announcement po nila before; they might be considered daw itong Axie as operator of payment system so it might be under their jurisdiction. Pero siguro I’ll defer to the BSP na po on that,” he said.

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His advise is for the public to “stay safe” and exercise “due diligence”, that is to check with the SEC first to check if these crypto online platforms, including play-to-earn platforms, are registered.

If these are registered, then there is less likelihood of a scam. There is also a “data privacy risk” if these online platforms are not registered in the country.

“There’s data privacy risk, you don’t know what they’ll do with your data especially if they are not registered here in the Philippines. Iyong pera ninyo rin po, you don’t know what will happen to iyong pera ninyo kung malalabas pa ba ‘yan o hindi,” Lee said.

Axie Infinity is a play-to-earn platform that allows players to accumulate tradeable crypto coins.

According to Bloomberg Wealth, “Axie Infinity’s daily active users swelled from 30,000 in April this year to more than 1 million in August, with most logging on from developing countries hit hard by Covid, including the Philippines, Brazil and Venezuela.”

(Eagle News Service)