The Philippine Securities and Exchange Commission (SEC) has recently released an advisory regarding the online trading platform eToro, highlighting that the platform lacks the authorization to sell or issue securities within the country. This advisory, issued in March and made public on April 4, serves to inform the public about the limitations of eToro's operations in the Philippines.
According to the SEC's advisory report, eToro's business model allows Filipinos to create user accounts on its platform for investing in and trading unregistered investment products. However, the company is not registered as a corporation in the Philippines and lacks the necessary licenses or authority mandated by the Securities Regulation Act to engage in securities sales or operate as a broker-dealer within the country.
eToro, established in 2007, is a multinational trading company widely popular among millennials. With over 33 million registered users globally and a presence in 140 countries, eToro is projected to reach a valuation of $3.5 billion by 2023, as reported by Statista. Despite its global reach, the Philippine financial regulator advises caution to investors considering engaging with unregistered online investment platforms like eToro.
The SEC's warning extends to individuals acting as eToro salespersons, promoters, influencers, endorsers, or agents within the Philippines, emphasizing potential legal consequences. Violators may face fines of up to $88,300 (Php 5 million) or imprisonment for up to 21 years under securities laws.
While the eToro website currently lists the Philippines as a supported country, similar advisories have been issued by regulatory bodies internationally. In November 2023, the U.S. Securities and Exchange Commission issued a comparable advisory regarding cryptocurrency exchange Binance, questioning its authority to sell or issue securities to the public.
In a broader context, the regulatory landscape in the Philippines is evolving, with authorities taking proactive measures to protect investors. Actions such as the National Telecommunications Commission's blocking of cryptocurrency websites without proper licenses and the SEC's directives to restrict access to platforms like Binance underscore the government's commitment to safeguarding the interests of Filipino investors.
