Bitcoin operators under BSP scrutiny

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is now evaluating the applications of five virtual currency exchange operators as part of efforts to regulate the fast growing but potentially risky industry.

“As for the virtual currency exchanges, we currently have five applicants,” BSP Governor Nestor Espenilla Jr. said.

Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. People could buy and sell bitcoins by tapping dealers or brokers or going to bitcoin exchanges.

Holders could also look for services or goods whose merchants accept bitcoin payments.

Last January, the BSP issued Circular No. 944 laying down the guidelines for virtual currency exchanges. It is the policy of the central bank to provide an environment that encourages financial innovation while at the same time ensure that the Philippines is not used for money laundering or terrorist financing activities, and that the financial system and financial consumers are adequately protected.

Thus, the regulator recognizes that virtual currency systems have the potential to revolutionize delivery of financial services, particularly for payments and remittance, in view of their ability to provide faster and more economical transfer of funds, both domestic and international, and may further support financial inclusion.

“We see a rapid increase in the trajectory. It is coming from a small base but increasing that is why we decided to require them to register,” he said earlier.

Latest data showed the volume of bitcoin transactions in the country has more than tripled to $6.98 million per month last year from $2.09 million in 2015.

“That is the importance of putting them under the regulatory framework. They have to comply with it. We are moving to regulate them,” he said.

The BSP circular states virtual currency exchanges providing a facility for the conversion or exchange of fiat currency or government-issued currency to virtual currency are considered similar to remittance and transfer companies and should be covered by Republic Act 9160 or the Anti-Money Laundering Act of 2001.