Previously on October 15, 2024, policy think-tank Infrawatch PH sent a letter to the Securities and Exchange Commission (SEC) to push for regulatory action against exchanges OKX and Bitget. This comes after both exchanges held promotional events in the country, which Infrawatch describes its educational initiatives as a “disguise”. After its announcement, Infrawatch received backlash for their recommendation for the SEC to crack down on OKX and Bitget.

Bitdigest has reached out to Infrawatch convenor Terry Ridon to provide comments and further context behind Infrawatch’s decision. Here were Bitdigest’s questions:

Why OKX and Bitget?

Q: What were the motivations of Infrawatch to suggest legal action from SEC against crypto exchanges OKX and Bitget? What makes these two exchanges stand out from other exchanges? 

How can exchanges adhere to regulatory policies when BSP has halted entities from obtaining VASP licenses until September 2025?

A: We have been consistent in our position that assets, which are akin to securities, investment or financial products should be subject to strict government regulation as these are imbued with public interest, particularly as these funds are the public’s hard-earned money. 

As such, cryptocurrency exchanges seeking to operate in the Philippines should subject themselves to the government's regulatory regime, such as registering both with the PH SEC and the Bangko Sentral ng Pilipinas as a VASP.

As a result of a regulatory pause by the BSP on new VASPs, new exchanges should wait until the VASP moratorium is over. But to be clear, Bitget and OKX had been operating in the Philippines even prior to the moratorium.

Concerns on overregulation and VASP licensing

Q:  What criteria does Infrawatch believe should be met by international exchanges to operate in the Philippines?

Based on the sentiment on social media, Filipinos see foreign exchanges to be the better choice compared to local exchanges. How can we ensure that overregulation does not happen to maintain both regulatory compliance and user-experience satisfaction? 

The US SEC has also confessed that it has done poorly on regulating cryptocurrency, claiming its approach to be “a disaster for the whole industry”. How can PH SEC avoid overregulation on cryptocurrency, unfair monopoly by local exchanges, and discouraging foreign exchanges from doing business in the Philippines?

Aside from licensing issues, what other threats do you think these exchanges pose to the Philippines, especially considering they operate legally in countries with stricter compliance standards, like Singapore?

A: The criteria is fairly simple: register with the SEC and acquire a VASP license from the BSP. Global exchanges should have no difficulty complying with local regulations given their global market power and asset base. More importantly, if these can secure licenses in stricter jurisdictions, they should have no difficulty acquiring the same licenses here. 

It is incorrect to say that there’s overregulation at this point in the Philippines particularly because they’re only two things that are being asked of cryptocurrency exchanges: to register with the SEC and to acquire a VASP license. Nothing more, nothing less.

Netizen’s call against online gambling accessibility

Q: Online gambling entities in the Philippines have ensured that using their apps are easy, considering it is easily accessible in e-wallets such as GCash. They have also mass marketed online gambling on social media through sponsored content creators, large billboards, and other viral marketing techniques that are easily consumable to all Filipinos both online and offline, including impressionable minors on social media. Will Infrawatch also call out these gambling entities that practice unsafe marketing techniques?

A: It is also amusing that cryptocurrency exchanges are being compared to online gambling sites as both are clearly different, except for the fact that both are very high risk endeavors to the public. Both are being strictly regulated by the government, and it is our position that illegal gambling sites should also be prohibited by government regulators. 

Other groups have called for the banning of illegal gambling sites as well, and we support this call for government regulators such as PAGCOR and PCSO to crackdown on illegal online gambling operations. It also is in the same spirit that we’re calling for the banning of unlicensed and unregulated cryptocurrency exchanges by government regulators.

The Securities and Exchange Commission is yet to provide feedback regarding Infrawatch’s letter for regulatory action against these two exchanges.