Cloud Mining Contracts Are Securities, Says Philippines SECApril 11, 2018 4:58 pm
The Philippines securities watchdog, the Securities and Exchange Commission (SEC), warned it will regulate cryptocurrency cloud mining contracts in the country under currently existing securities rules, CoinDesk reported Wednesday.
The SEC said cloud mining contracts should be classified as securities, since when the Howey test is applied, it was determined to involve investment with the expectation of returns, the report said.
CoinDesk explains cloud mining is a process where investors do not deploy actual mining hardware to earn cryptocurrency, but instead take a stake the mining capacity of a remote facility through a contract, which can sometimes be further exchanged.
According to the Philippines SEC, the decision is the result of observing individuals and firms advertising and soliciting investors inside the country, the report said, which the agency is now treating as an unregistered issuance of securities.
Because of that, the regulator said any entity or individuals – including salesmen, brokers, promotors or recruiters – involved with offering cloud mining contracts in the country without registration may be prosecuted and penalized with a sentence of up to 21 years in prison, the report said.
The ruling follows the Philippines’ toughened stance on activities relating to cryptocurrencies in recent months, CoinDesk reported.
While the securities regulator has been reportedly crafting laws to regulate initial coin offerings, the report said, it has also stepped its up efforts to scrutinize cryptocurrency projects that fall under the scope of existing securities rules.
Separately, the country’s lawmakers are considering proposals for tougher penalties on any crime that relates to cryptocurrency, according to a CoinDesk report in March.
– WN.com, Jack Durschlag