Securities: An analysis of Howey test in the operational dynamics of virtual currency

• Main Author: Villanueva, Ralph H.
• Format: text
• Language: English
• Published: Animo Repository 2019
• Subjects: Digital currency—Law and legislation; Law
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6742; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/13738/viewcontent/VILLANUEVA_RALPH_11381612_1.PDF_Redacted.pdf
• Institution: De La Salle University

The rise of the digital information age brought the term virtual currency. Virtual currency is a foreign concept. An online community of users create this digital money. To date, there are small and medium enterprises in the country which are using this kind of technology. As a consequence, their transactions became more efficient, and effective in delivering their goods and services to their consumers. The result of this virtual currency usage especially remittances among overseas Filipino workers (OFWs) gave rise to a regulation of the Bangko Sentral ng Pilipinas (BSP) through its issuance of Circular no. 944, Series of 2017. In the Philippine legal definition, virtual currency does not attain a precise meaning. However, resolutions from the Securities and Exchange Commission (SEC) although they do not form part of the Philippine law classified virtual currencies as securities. In particular, SEC concluded that it passed the Howey Test.1 Thus, the author proposed that virtual currency is an investment contract. In this paper, the author sought to focus on the legal and operational dynamics of virtual currencies. The author asserts that virtual currency is a security classified as investment contracts passing the Howey Test2. The 1 In re: Black Cell Technology, Inc, et. al., SEC CDO Case No. 01-18-046 2 Howey Test is a United States Supreme Court decision from SEC v. W.J. Howey Co. within the meaning of the Securities Act of 1933. This is an important case in determining the general applicability of the federal securities law. The decision was adopted by the Philippine Supreme Court in -i- 4 - incorporation of decided cases and legal principles of the Philippine Supreme Court would give the legal meaning of virtual currency in the local context. Passing the Howey Test, virtual currencies are required to be registered pursuant to Section 8 of the Securities Regulation Code. Chapter One discussed the background of the study, thesis and problem statement, and objective. Chapter Two defined terminologies related to the study. Chapter Three discussed the related literature of virtual currencies as electronic in form, and as an investment contract. Chapter Three provided for the analysis. Chapter Four discussed the conclusion. Lastly, Chapter Five recommended that virtual currency is a security under the realm of the Philippine legal context.