The representative of the Commission on securities and exchange Commission of the Philippines (SEC) announced that contracts for cloud mining will be regulated in accordance with the country’s rules «of trading and placement of securities», as according to the Howey test process has been defined as a cash investment with an expected return profit.
Cloud mining is a process in which the investor for a specified term leases from the company, which invests part of computing power for mining cryptocurrency. During the term of the contract the investor receives the mined cryptocurrency.
According to the SEC Philippines, the decision was taken after long observation of how individuals and firms is collected from investors within the country, the money for cloud contracts which now the Agency is considering as unregistered issuance of securities.
Now any individual or company, including sellers, brokers, advertisers, etc. involved in the award of contracts for cloud mining without registering would be prosecuted and can be sentenced to 21 years in prison.
This decision is a consequence of the tightened policy of the Philippines for operations with cryptocurrencies. Individual legislators island States put forward proposals for tougher sanctions against any crime with cryptocurrencies.
Today it is clear that the financial regulator of the country, in addition to the development of laws in relation to the ICO (initial placement of tokens), has intensified its efforts in respect of cryptocurrency projects that fall under the existing rules of trading and placement of securities.