Philippines SEC Issues Warning Against Gemini Derivatives
- The Philippines Securities and Exchange Commission has warned citizens against investing in the Gemini Foundation.
- Gemini Foundation is a non-US derivatives platform by the exchange that debuted on May 1 across 29 countries.
- The PSEC stated that derivatives are considered securities under local law, and therefore, such products need to be registered.
- The agency added that Gemini does not have the authority or licensing to offer derivatives to the citizens of the country.
Crypto derivatives are a highly volatile market that regulators around the world have tried to warn investors about. However, the popularity of these products on exchanges like Binance, remains high as investors gradually demand more exposure to them. As a result, major crypto exchange Gemini recently debuted a non-US derivatives platform in major countries around the globe except the United States. The Philippines was also a part of this expansion, but the country’s Securities and Exchange Commission (PSEC) has warned investors against putting their money on the platform.
As per a public warning issued by the Philippines Securities and Exchange Commission, derivatives are considered securities under the law of the country, and therefore, such products should be registered under the PSEC. However, Gemini Exchange announced the product on May 1, but no registration was sought from the government agency.
The regulator added that Gemini does not have the proper license and authority to provide exposure to derivative products to the citizens of the Philippines. The agency also stated that all salesmen, brokers, dealers, or agents that sell or promote unregistered securities face a fine of up to 5 million pesos ($89,826) or 21 years’ imprisonment according to the laws of the land.
“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. […] It’s not optional. It’s the law.”
While the warning was dated May 11, it was made available to the general public a week later. Meanwhile, there is a gradual rise in the adoption rate of cryptocurrencies in the Asia-Pacific region, including the Philippines.
Recently, the world’s largest crypto exchange, Binance, revealed that it was working with the Philippines Cybercrime Investigation and Coordination Center (CICC) under the Department of Information and Communications Technology (DICT), to fight blockchain-related cybercrime.
On the other hand, the United States continues to crack down on crypto firms and investors. As reported earlier by Bitnation, US President Joe Biden expressed disapproval of a debt ceiling deal presented by the Republicans that allowed crypto investors to offset their crypto losses with capital gains provided the asset was sold. Biden criticized tax-harvesting for crypto traders and seeks to end the same.
On the other hand, the Philippine regulator mentioned in the warning the actions that the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have taken against Gemini, asking investors to refrain from investing in the platform.
According to previous reports, Gemini debuted the non-US derivatives platform on May 1 in Singapore, Hong Kong, India, Argentina, Bahamas, Bermuda, the British Virgin Islands, Bhutan, Brazil, the Cayman Islands, Chile, Egypt, El Salvador, Guernsey, Israel, Jersey, New Zealand, Nigeria, Panama, Peru, the Philippines, Saint Lucia, Saint Vincent and Grenadine, South Africa, South Korea, Switzerland, Thailand, Turkey, Uruguay, and Vietnam.
The non-US derivatives platform was named the Gemini Foundation and had a default leverage of 20x, while the maximum leverage was 100x.