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On 11 March 2026, the Securities and Exchange Commission (SEC) released for public comment its draft memorandum circular entitled “Guidelines Lifting the Moratorium on Online Lending Platforms and Prescribing Prudential, Disclosure, and Market Conduct Requirements for Financing and Lending Companies” (Draft Circular).
The Draft Circular proposes to lift the moratorium imposed under SEC Memorandum Circular No. 10, Series of 2021 on the registration of new online lending platforms (OLPs), while introducing a more comprehensive and stringent regulatory framework governing digital lending.
Lifting the Moratorium on OLPs
In 2021, the SEC imposed a moratorium on OLPs following complaints relating to collection practices, data privacy violations, and lack of transparency. The Draft Circular, if issued will lift this restriction and allow financing companies (FCs) and lending companies (LCs) to operate new OLPs.
Proposed Regulatory Requirements for OLPs
A key innovation being proposed under the Draft Circular is the introduction of a “Pre-Disclosure Classification Declaration”, which must be submitted to the SEC before deploying a digital platform. The SEC will determine whether the platform qualifies as an OLP based on whether it performs Core Lending/Financing Functions (CLF)—i.e., activities that determine, create, price, administer, or enforce credit obligations, and which, by their nature, define the assumption and management of credit risk.
The Draft Circular also introduces additional pre-operational requirements for FCs and LCs intending to operate OLPs, including: (i) obtaining a favorable classification or approval from the SEC; and (ii) obtaining prior approval of an amended business plan before deployment. While earlier issuances already imposed certain platform-specific obligations, such as the requirement to register OLPs as business names and submit reports and disclosures to the SEC, the Draft Circular goes further by introducing a formal classification process and requiring prior SEC approval before deploying the OLP.
New Capital Requirements
The Draft Circular indicates a policy shift toward aligning capital requirements with the scale and risk profile of digital lending activities. In particular, the SEC appears to be moving toward linking capitalization with the number of online platforms operated, rather than relying solely on fixed thresholds under existing regulations.
Existing companies will be given a three-year transition period to comply and must submit a Capital Compliance Plan, allowing them to either increase capitalization or rationalize their OLP operations to meet the new thresholds.
Strengthened Consumer Protection and Data Privacy Rules
The Draft Circular reinforces compliance with existing consumer protection and data privacy obligations.
Limits on Outsourcing and Anti-Circumvention Measures
The Draft Circular restricts the outsourcing of Core Lending/Financing Functions, requiring that key credit-related decisions and processes remain with the licensed entity. It also introduces anti-circumvention provisions based on a substance-over- form approach, allowing the SEC to treat multiple platforms as a single integrated OLP structure where they share ownership, systems, or borrower markets; and prohibiting fragmentation, white-labeling, or rebranding to avoid regulatory and capitalization requirements.
Implications for Existing OLPs
For existing OLPs, the proposed rules are likely to require the following: (a) a reassessment of digital platforms and business models, particularly in light of the function-based definition of OLPs; (b) the preparation of a Capital Compliance Plan and, where necessary, capital infusions to align with the new capital thresholds; and (c) a thorough review of operational systems, including data privacy practices, disclosure mechanisms, and third-party outsourcing arrangements, to ensure compliance with the enhanced regulatory standards under the rules.
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