By Melissa Luz T. Lopez,
Senior Reporter

The Bangko Sentral ng Pilipinas (BSP) is not yet keen on imposing rules on crowdfunding as the platform remains relatively young and small, but noted that the regulator continues to monitor new capital-raising avenue.

“Since the crowdfunding industry is still nascent in the Philippines, it may be not yet be the time to issue regulations but we continue to monitor the crowdfunding industry and we’ll take regulatory action when the time comes or when necessary,” BSP Governor Nestor A. Espenilla, Jr. said in a speech during the FINTQ roundtable discussion on Friday.

Crowdfunding utilizes online channels to raise fresh capital from willing donors or lenders, as it basically relies on idle funds in the pockets of individuals who believe in the business pitch or goal presented by the proponent. The World Bank has identified four main types of alternative financing: donations, rewards, equity, and lending.

Among the common crowdfunding projects online often support product development, medical treatments, scholarships, travel plans, and outreach programs.

Over the past year, the BSP has been studying whether it should step in to regulate these platforms, which online users can use as an alternative way to generate funds instead of securing bank loans or turning to the capital markets for credit.

Apart from the BSP, the Securities and Exchange Commission (SEC) is also looking into the new fund-raising platform, mainly to deter scam operators from using the free virtual market.

SEC chairperson Teresita J. Herbosa said in October last year that the corporate regulator is eyeing to draft rules to govern crowdfunding by requiring these service providers with projects in the Philippines to secure a license from the SEC, as their activity is considered as issuing equity or other forms of return of investment to the public.

As far as the BSP is concerned, it will remain on a wait-and-see mode towards the emerging lending channel, the central bank chief said.

“We are currently monitoring industry developments on crowdfunding and peer-to-peer lending. While crowdfunding clearly has a potential to expand financial access for new businesses and MSMEs (micro, small, and medium-scale enterprises), there’s also heightened risk of investor and consumer abuse,” the BSP chief added.

As a general policy, the central bank has been crafting regulations to create an “enabling” environment for financial technology to prosper, as it seeks to balance innovation and consumer protection.

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