The central bank of the Philippines, Bangko Sentral ng Pilipinas (BSP), expanded the country’s cryptocurrency regulation after the use of crypto exchanges recorded “accelerated growth”. The new legal framework is in line with the guidelines recommended by the Financial Action Task Force (FATF), according to the central bank.
The Philippine central bank introduces new rules for crypto service providers
Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, announced Tuesday that it had set new guidelines for virtual asset service providers.
“The Monetary Board (MB) approved the guidelines for virtual asset service providers (VASP) or companies that facilitate financial services by conducting virtual asset (VA) activities to cover new business models and activities,” the central bank said.
BSP Governor Benjamin E. Diokno commented:
We have seen accelerated growth in the use of VCEs over the past three (3) years, and it is high time we broadened the scope of existing regulations to reflect the evolution of this financial innovation and set reasonable expectations for risk management.
The new guidelines change the existing regulations for the exchange of cryptocurrencies, which were enacted in 2017. The central bank states that the new legal framework is “aligned with the best practices of the fintech industry and with those of international standardization bodies such as the Financial Action Task Force (FATF)” to combat money laundering (AML), to combat the financing of terrorism (CFT ) and to finance proliferation (PF).
“The framework approved by MB has expanded the activities that are subject to the Bangko Sentral licensing system from initially to those involved in facilitating the exchange of Fiat and VA,” the central bank described.
The added activities are the exchange between one or more cryptocurrencies, the transfer of cryptocurrencies and the “custody and / or management of VAs or instruments that enable control over VAs”. Companies involved in these activities are now subject to “BSP licensing requirements, Money Service Providers (MSB) regulatory expectations”, and money laundering, CFT and PF obligations.
Governor Diokno added:
This ensures that activities related to VASP are carried out within an unbroken chain of regulated companies.
The new framework also emphasizes that all transactions involving the transfer of cryptocurrencies “will be treated as cross-border transfers” and that crypto service providers will be “expected to comply with the relevant BSP rules for transferring, particularly with regard to the obligation to immediate and secure provision Transmission of information of the originator and the beneficiary from one VASP to another for certain transactions. “
In addition, BSP-approved virtual asset service providers must also adhere to other existing rules for money service providers, including rules for “outsourcing, liquidity risk management, operational risk management, information technology risk management and financial consumer protection”.
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