Key Takeaways:
- Following this month, the Philippines’ Bangko Sentral ng Pilipinas will no longer accept crypto license applications for three years.
- The central bank is the Philippines’ primary regulator of the cryptocurrency industry.
The Philippine central bank is putting a three-year hold on new virtual asset service provider (VASP) licenses to strike a balance between the potential risks associated with digital assets and the rapidly expanding crypto industry.
The central bank continued, “The Bangko Sentral acknowledges that VAs [virtual assets] pose various risks that may subvert economic security, even as they present opportunities to encourage significantly larger access to financial services at reduced costs,” expounding:
Starting on September 1, 2022, the regular application window for new VASP licenses shall be closed, subject to reevaluation based on market developments.
The BSP stated in a memo that its “modified approach” seeks to strike a balance between encouraging financial sector innovation and making sure that potential risks stay within manageable levels.
According to BSP data, as of June 30, 19 institutions in the Philippines currently have VASP licenses; five are still inactive, and one stopped operating in January.
The central bank pointed out that current BSP-supervised financial institutions may still apply for a VASP license if they have a Supervisory Assessment Framework composite rating of at least “stable” and wish to expand their operations by providing crypto services, including custodial services.
BSP Governor Felipe Medalla said in a statement that “recent market developments have necessitated the adoption of a modified VASP licensing approach,” without going into further detail.
“[It] strategically shifts the focus to evaluating the overall performance and risk management systems of the existing Bangko Sentral-registered VASPs, their influence on the financial services and financial inclusion agenda, and their contribution towards the accomplishment of the Digital Payments Transformation Roadmap (DPTR) objectives,” Medalla continued.
Existing BSFIs may still apply for a VASP license under the new strategy if they have strong risk management systems, including appropriate client suitability assessment and customer onboarding practices and intensified financial consumer education and awareness Programmes.
Recently, Binance, a prominent cryptocurrency trading platform, has been considering expanding its presence in the island nation of the Philippines. In a press interview, Changpeng Zhao, CEO, announced that they intend to purchase the two licenses required for Binance’s operations in the Philippines.
