SEC opens strategic sandbox for crypto service providers

MANILA, Philippines — The Securities and Exchange Commission (SEC) is introducing a regulatory sandbox for crypto-asset service providers (CASP) to facilitate responsible innovation and ensure investor protection given the continued growth and development of new crypto-asset services.

The commission has issued a notice that opened applications for participation in the SEC Strategic Sandbox (StratBox), which is specifically tailored for CASPs.

Regulatory sandbox is defined by the SEC as a regulatory tool that will enable a sandbox participant to test its innovative product or service or a new business model in a live and controlled environment, within a defined period.

The thematic StratBox will focus on entities engaged in or intending to engage in crypto-asset services such as cryptocurrency exchanges, virtual asset custodians and other related service providers.

SEC’s StratBox program for CASPs is aimed at fostering and encouraging responsible innovation within the financial services sector, particularly in the emerging field of crypto-asset services.

It is also designed to provide a controlled and supervised environment where CASPs can test and pilot their products, services and business models.

Further, the program seeks to ensure that innovation is balanced with robust investor protection measures to maintain market integrity and financial stability.

Through the program, the SEC hopes to gather critical insights and data on the risks and opportunities associated with crypto-asset services and their providers.

The SEC said the information would be instrumental in drafting comprehensive and effective rules on CASPs.

“The SEC encourages all eligible and interested parties to take advantage of this opportunity to participate in the StratBox and contribute to the development of a sound regulatory environment for crypto-asset services in the Philippines,” it said.

According to the commission, the initiative is in accordance with SEC Memorandum Circular No. 9, Series of 2024, which provided the framework of the regulatory sandbox in line with its mandate under the Securities Regulation Code to encourage competitiveness in the market through promulgation of rules for registration and licensing innovative and other trading markets.

Under the framework, the SEC may grant regulatory reliefs to sandbox participants by modifying or replacing specific licensing, registration, compliance or other regulatory requirements that may otherwise apply, during the sandbox period.