BSP OKs 2 more virtual currency exchanges

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has approved the registration of two more virtual currency exchanges amid the steady rise in the volume of transactions in the country.

BSP Deputy Governor Chuchi Fonacier said in an interview with reporters the regulator has given ETranss and Virtual currency Philippines Inc. the green light to operate virtual currency exchanges in the country.

Fonacier said the recent approvals brought to five the number of virtual currency exchanges approved by the BSP.

The BSP approved the registration of Betur Inc. and Rebittance Inc. in September and October last year, respectively. On the other hand, BloomSolutions became the third virtual currency exchange operator in the country last May.

She said the regulator may no longer require applicants of virtual currency exchanges to also secure an electronic money issues (EMI) license.

“There are some refinements. This may entail additional requirement but not automatically an EMI license,” Fonacier said.

A huge portion of the 29 pending applications for virtual currency exchange as shown in various business models submitted to the BSP contained variation involving requiring customers to maintain an electronic or e-wallet.

To become an EMI issuer, applicants should comply with the capital requirement of between P100 million and P150 million.

Cryptocurrency is a type of virtual currency that uses cryptography – a method of storing and transmitting data in unreadable form so that only the intended receivers can read and process it. Bitcoin is the first and most popular cryptocurrency to date introduced in 2009.

Latest data from the BSP showed conversion of virtual currencies into peso and other currencies amounted to $24.16 million, while conversion from peso and other currencies to virtual currencies reached $36.74 million in the first quarter.

In the fourth quarter of last year, the average monthly transactions involving conversion of virtual currencies to peso and other currencies reached $24.79 million, while conversion from peso and other currencies to virtual currencies amounted to $38.27 million.

Following the rise in the use of virtual currency for payments and remittances in the Philippines, the BSP established a formal regulatory framework for virtual currency exchanges through Circular 944 dated Feb. 6, 2017.

The circular requires virtual currency exchanges to register with the BSP as remittance and transfer companies. These exchanges are also required to put in place adequate safeguards to address the risks associated with virtual currencies, including control measures to counter money laundering/ terrorist financing, technology risk management systems, and consumer protection mechanisms.

The central bank issued Circular 942 in January last year laying down the rules and regulations governing the operations and reporting obligations of non-bank entities engaged in remittance, money changing, and foreign exchange dealing, pursuant to Republic Act 9160 or the Anti-Money Laundering Act (AMLA) of 2001 and RA 7653 or The New Central Bank Act.