The Philippine Securities and Exchange Commission has warned investors that Gemini is operating its newly launched derivatives exchange without regulatory authorization in the country, Bloomberg News reported May 22.
The watchdog issued an official warning to the exchange on May 18, according to the report.
Violating the country’s securities regulations carries a 21-year prison sentence or a fine of approximately $90,000 if found guilty.
Gemini Foundation
Gemini launched its non-US derivatives platform Gemini Foundation in May, with the Philippines as one of its supported regions. However, the country’s regulators claim that the exchange has no legal right to operate in the country as it has not obtained approvals for its products.
The SEC added that Gemini has been marketing derivatives, which are essentially considered securities in the Philippines, and has not received regulatory approval to sell securities.
According to the Philippine SEC:
“Gemini Trust Company LLC’s lack of prior registration with the Commission makes their activities of offering and/or selling securities in the form of derivatives illegal in violation of the provisions of the SRC.”
The regulator advised the public to avoid investing in the exchange and to halt all ongoing investments until further notice as the Gemini Foundation does not have the “necessary license and/or authority to solicit, accept investments/placements from the public or to accept or to issue securities. .”
The Gemini Foundation was created to avoid regulatory uncertainty and hurdles for the crypto industry in the US. However, the action by the Philippines shows that going global brings its own set of problems for the emerging industry.
Regulatory uncertainty
New York-based Gemini Trust has faced regulatory pressure in the US and the launch of its non-US derivatives platform was a way to keep operating regardless of the situation in the US regulatory landscape.
Regulations remain unclear in the country, and regulators have been unwilling to create new rules for the industry. The SEC has argued in courts that current securities laws already cover most of the crypto sector and that new rules are not necessary.
However, many crypto companies disagree and are engaged in legal battles with the SEC over its various anti-crypto holdings.
This has led to a growing sense in the crypto industry that the US may not be the place to be when it comes to setting up their businesses and projects.
Many have already begun an exodus from the US and are in the process of establishing non-US entities to continue operating globally.
Some countries, such as the UAE and Portugal, are accepting the crypto industry with open arms and are using it as an opportunity to set themselves up as hubs.
