Philippines Moves to Tackle Crypto Tax Evasion With New Rules | BSCN (fka BSC News)

The Philippines announced plans to roll out a full-scale framework for digital assets to stop cross-border tax evasion and shut down illicit financial flows.

Finance Secretary Ralph Recto, in a public statement, confirmed that the Department of Finance (DOF) will adopt the Crypto-Asset Reporting Framework (CARF) by 2028

"This is a timely commitment as digital currency becomes one of the preferred means for transactions. The government must ensure that crypto-asset users are paying their fair share of taxes and that no illicit financial activity goes unpunished," Recto said.

The commitment was formally made by the DOF’s Revenue Operations Group Undersecretary Charlito Martin Mendoza during the 8th Asia Initiative Meeting in the Maldives earlier this year.

The decision is part of a broader government effort to increase transparency in crypto transactions and improve international cooperation on tax compliance.

CARF: A Tool for Global Transparency

The CARF, developed by the OECD, is designed to establish the automatic exchange of crypto-related financial data between tax authorities worldwide. Once implemented, it will allow the Philippines to receive data from foreign exchanges and platforms about the digital asset holdings and transactions of Filipino users.

According to Recto, faster systems for information sharing are critical if the government is to stay ahead of tax evasion schemes in the digital space.

SEC Targets Service Providers

Alongside CARF adoption, the Philippine Securities and Exchange Commission (SEC) has released new rules aimed at crypto asset service providers (CASPs). These guidelines mandate that any company offering digital asset services must register and secure proper licenses before operating in the country.

SEC Assistant Director Paolo Ong stated during Philippine Blockchain Week 2025 that the new rules were crafted not only to support legitimate businesses but also to shut down unregistered entities

“We believe that the rules will give more teeth to our enforcement team, and they can be more assertive in going after unregistered platforms that are operating in the Philippines,” Ong said.

The rules require CASPs to register as stock corporations with a minimum paid-up capital of PHP100 million (roughly $1.8 million). Additional documentation, including a business plan and risk disclosures, must be submitted for approval. These measures ensure only serious players enter the space while improving investor safeguards.

A major concern for regulators is the misuse of customer funds, an issue that has emerged in high-profile exchange collapses around the world. The new SEC guidelines require strict segregation between company and customer assets.

There’s currently no specific license for individuals offering financial advice on crypto. However, the SEC is encouraging those interested to explore its regulatory sandbox

Regulating Marketing and Influencers

Marketing of digital assets is also under the microscope. Under the new rules, anyone promoting crypto like Bitcoin, Ethereum and Solana must be a registered entity with an SEC license. Ong warned that so-called educators who push specific platforms, particularly scams, may face enforcement.

“We don’t prohibit compensation for educational efforts, but we always look at good faith. If you’re educating and not pushing a specific investment or platform, it’s generally acceptable,” Ong said.

Crypto Listing Rules and Dual-Regulator Model

The country’s broader regulatory push includes a twin-regulator model to oversee crypto token listings. Under this model, the Bangko Sentral ng Pilipinas (BSP) regulates Virtual Asset Service Providers, while the SEC handles digital assets that qualify as securities.

The combined effort is intended to tighten compliance across crypto exchanges, initial token offerings, and cross-border transactions. Regulations also integrate provisions from existing laws like the Data Privacy Act and the Cybercrime Prevention Act.

All token listings must follow strict rules on classification, risk scoring, KYC checks, and FATF Travel Rule compliance for transactions over $1,000.

Penalties for Non-Compliance

Penalties under the new framework are strict. For CASPs, first-time violations can draw a PHP50,000 ($885) fine, increasing to PHP200,000 ($3,540) for repeat offenses. Unused licenses can be revoked after 12 months of inactivity.

For larger violations involving fraud or false claims, companies may face fines up to PHP5 million and imprisonment of up to 21 years. Data privacy breaches can result in additional penalties between PHP500,000 and PHP5 million.

The government has also expressed its openness to refining the rules as the industry evolves. Ong stressed that feedback from the community will be an essential part of shaping future guidelines