The Philippines Officially Legitimize Bitcoin as Payment Method
Bankgko Sentral ng Pilipinas (BSP) is officially regulating local Philippine Bitcoin exchanges as remittance companies and recognizing Bitcoin as a legitimate payment method.
Bankgko Sentral ng Pilipinas, hereinafter BSP, is officially regulating local Philippine Bitcoin exchanges as remittance companies and recognizing Bitcoin as a legitimate payment method.
Earlier this month, BSP Deputy Governor Nestor Espenilla announced the plans of the Philippine Central Bank to issue a proper regulatory framework for Bitcoin users, exchanges and companies. Espenilla emphasized the exponential growth of Bitcoin within the country, stating that monthly Bitcoin volumes increased from $1 mln to $6 mln a month in a year.
Guidelines for Virtual Currency (VC) Exchanges
Almost immediately after the announcement of Espenilla, the Central Bank of the Philippines released BSP Circular No.944 entitled “Guidelines for Virtual Currency (VC) Exchanges,” to provide clarity on the legality of Bitcoin exchanges.
In the document, BSP clarified that Bitcoin will still not be considered as an endorsement of the Philippine government nor a legal currency as it isn’t issued by the central bank. However, considering the benefits of Bitcoin as payment and remittance networks, BSP intends to regulate Bitcoin and Bitcoin startups as remittance companies.
As soon as the circular takes full effect within the next two weeks, Anti-Money Laundering (AML) and Know Your Customer (KYC) policies are set to be tightened for local Bitcoin exchanges and companies.
The circular read:
“The Bangko Sentral does not intend to endorse any VC, such as Bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.”
Growth of Bitcoin startups, relationship with regulators
Over the past two years, leading Bitcoin exchanges and service providers such as Coins.ph and Rebit.ph have maintained efficient and close relationships with BSP to ensure their operations are compliant with local regulations.
Coins.ph in particular collaborated with BSP to establish necessary AML and KYC systems for its operations. For high profile traders and investors, the Coins.ph legal team required the submission of licenses, government-issued IDs and face-to-face calls.
However, the new circular will create a more difficult environment and regulatory frameworks for companies like Coins.ph to deal with. Like New York’s BitLicense, Bitcoin exchanges and service providers will have to pay a registration fee and annual fee of $2,000. That is an initial fee of $2,000 and a recurring annual fee of another $2,000.
“A VC exchange shall obtain Certificate of Registration (COR) to operate as a remittance and transfer company […] The provisions of Subsec. 4511.N.2 on the issuance of Bangko Sentral COR, accreditation of remittance sub-agents, registration with the Anti-Money Laundering Council Secretariat and mandatory training shall also apply to VC exchanges. A VC exchange shall pay the registration and annual service fees as provided under Subsec. 4511N.8,” read the circular.
In other words, to be fully compliant with new regulations on Bitcoin, companies will have to apply for a license and be authorized to operate by the Central Bank of the Philippines.
For the long-term growth of the Bitcoin industry in the Philippines and mainstream adoption, the transparent and clarified regulatory framework for Bitcoin users and companies will ultimately be beneficial.