The Philippines’ major cryptocurrency industry regulator is the central bank.
The Philippine central bank imposed a three-year moratorium on new virtual asset service provider (VASP) licenses to strike a balance between the potential risks posed by digital assets and the quickly growing cryptocurrency market.
“The Bangko Sentral understands that VAs [virtual assets] represent different hazards that may undermine economic stability, even as they present opportunities to enable much greater access to financial services at reduced costs,” the central bank stated, elaborating:
The standard application period for new VASP licenses will close on September 1, 2022, subject to reassessment depending on market events.
In a document, the BSP explained that its “modified approach” aims to strike a balance between fostering innovation in the financial industry and guaranteeing that possible risks remain within tolerable ranges.
What About The Existing Exchanges?
As of June 30, 19 institutions in the Philippines had VASP licenses. According to BSP data, five institutions are still dormant, and one quit operating in January.
The central bank said that existing BSP-supervised financial institutions may still apply for a VASP license provided they have at least a “stable” Supervisory Assessment Framework composite grade and want to expand their business by offering crypto, particularly custodial services.
Without providing any information, BSP Governor Felipe Medalla stated that “recent market events have forced the use of a modified VASP license system.”
According to Medalla,
“[It] strategically shifts the focus to evaluating the overall performance and risk management systems of the existing Bangko Sentral-registered VASPs, their impact on the financial services and financial inclusion agenda, and their contribution towards the achievement of the Digital Payments Transformation Roadmap (DPTR) objectives.”
Existing BSFIs may still apply for a VASP license per the new strategy if they have robust risk management processes, including effective customer suitability assessment & customer onboarding procedures and enhanced financial consumer awareness and education Programs.
The well-known cryptocurrency trading site, Binance, has recently considered growing its presence in the Philippines, an island nation. Changpeng Zhao, the CEO, revealed at a press conference that they plan to buy the two licenses needed for Binance’s activities in the Philippines.