The Philippines Central Bank, aka the Bangko Sentral ng Pilipinas (BSP), has issued a broader licensing regime that will include all cryptocurrency financial service providers within its regulatory purview.
Filipino virtual asset service providers (VASPs) will have to obtain a “certificate of authority” from the monetary regulator. Crypto services offering custodian services will require a minimum capital requirement of 50 million Philippine pesos (around $1 million). On the other hand, businesses without custody will need 10 million pesos ($208,000).
New Framework Designed To Curb Dishonest Practices
The BSP approved this new framework to strike against money laundering and terror financing practices using digital currencies. The documents mentioned in the document have been enacted in line with the Financial Action Task Force (FATF). Benjamin Diokno, the BSP head, said in a statement:
“We have seen accelerated growth in the use virtual currency exchanges in the past three years. It is high time that we broaden the scope of existing regulations in recognition of the evolving nature of this financial innovation and set out commensurate risk management expectations.”
What Else Does The Regulation Specify?
Along with complying with existing risk management rules imposed upon traditional financial services providers, the VASPs will also have to maintain due diligence on their customers. The companies will closely monitor parties that conduct transactions over 50,000 pesos ($1,000). Plus, single transactions that exceed 50,000 pesos will require extra diligence. According to the governor, this will “ensure that activities relating to virtual asset service providers are executed within an unbroken chain of regulated entities.”
BSP And CBDC – So Close Yet So Far
Last year, the BSP was closely researching central bank digital currencies (CBDC). Southeast Asia, in general, has been heavily researching digital and open finance. Singapore and Thailand, in particular, have a sophisticated electronic payment ecosystem in place. However, the BSP concluded from their studies that the Philippines still isn’t ready for CBDC implementation. According to them, further research is required on this subject.