To All Crypto Enthusiasts: Beware of Unregistered Investment Platforms
Philippine investors are being alerted by the Securities and Exchange Commission (SEC) about the risks associated with using unregistered online investment platforms. The recent target of scrutiny is eToro, a popular multinational online crypto trading platform with a user base exceeding 33 million globally.
eToro’s Lack of Registration in the Philippines
According to the SEC, eToro is not incorporated as a company in the Philippines and crucially lacks the required licenses stipulated under the country’s Securities Regulation Code.
- The Securities Regulation Code outlines the legal prerequisites for companies engaged in selling securities, brokerage services, or operating securities trading exchanges within the Philippines.
The absence of registration for eToro has raised concerns for the Philippine regulatory body, as unregistered platforms do not undergo the same level of oversight as licensed entities.
- This lack of oversight could potentially expose Filipino investors to risks such as fraud, market manipulation, and challenges in recovering invested funds.
The SEC issued an advisory in March which was made public on April 4th, explicitly stating that eToro is not authorized to offer securities to the public in the Philippines.
- The advisory also points out that Filipinos could create user accounts on eToro with the purpose of investing in unregistered financial products.
eToro’s Response and Regulatory Patterns
Despite the cautionary advisory from the SEC, eToro’s website currently indicates the Philippines as one of its supported countries.
- The action against eToro is part of a broader effort in the Philippines to regulate the landscape of online investments.
The SEC previously issued a similar advisory in November 2023 against cryptocurrency exchange Binance, citing concerns about unauthorized securities offerings.
- The National Telecommunications Commission (NTC) then intervened in March 2024 by blocking access to unlicensed crypto exchange websites.
Global Concerns and Lessons Learned
The actions taken by the Philippine government underline a growing apprehension among regulators globally regarding the risks associated with the proliferation of online investment platforms.
- While these platforms offer increased accessibility and reduced entry barriers for investors, the lack of adequate oversight may pose substantial risks.
The case against eToro in the Philippines serves as a cautionary lesson for both investors and online investment platforms. It is paramount for investors to conduct comprehensive research and verify that the platforms they engage with are appropriately licensed and regulated within their jurisdiction.
- Online investment platforms, in turn, must be cognizant of international regulations and ensure compliance with the legal requirements of the territories in which they operate.
Hot Take: Stay Informed and Vigilant as Crypto Investors
Philippine investors need to exercise caution when dealing with online investment platforms, especially those that are unregistered in the country. Make sure to stay informed, conduct due diligence, and prioritize safety when navigating the crypto investment landscape.
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