The Securities and Exchange Commission (SEC) is weighing the removal of its moratorium on new online lending platforms (OLPs), a move that could reopen the digital lending market under tighter regulatory standards aimed at protecting borrowers.

The regulator recently released a draft memorandum circular outlining proposed guidelines for lifting the freeze imposed in November 2021, when the SEC halted the registration of new OLPs to curb abusive lending practices and harassment linked to some loan apps.

Stricter capitalization

The proposal introduces stricter capitalization, disclosure and consumer-protection requirements for financing and lending companies operating digital lending platforms.

Under the draft framework, financing companies would face tiered minimum paid-up capital requirements depending on the number of online lending platforms they operate, while each firm would be limited to a maximum of 10 digital lending platforms to ensure manageable oversight.