The BSP (Central Bank of the Philippines) has released official guidelines for the regulation of virtual currency exchanges. The statements emphasize the potential benefits of remittances, threats posed by money laundering, and the desire for the Philippine government to foster development in bitcoin businesses.
It Is the Policy of the Bangko Sentral to Provide an Environment That Encourages Financial Innovation
After 12 months of deliberations the Philippines central bank, Bangko Sentral ng Pilipinas (BSP), has announced its guidelines for virtual currency exchanges.
The guidelines’ statement of policy opens by announcing that “It is the policy of the Bangko Sentral to provide an environment that encourages financial innovation while at the same time ensure that the Philippines shall not be used for money laundering (ML) or terrorist financing (TF) activities and that the financial system and financial consumers are adequately protected”, echoing familiar statements to other governments who have been proposing regulations for bitcoin and cryptocurrency.
The guidelines continually stress that the Philippines feels vulnerable as an under-regulated financial market, acknowledging the potential for those seeking to use virtual currencies for money laundering or terrorist financing to be attracted to the Filipino cryptocurrency markets.
The BSP also states that it “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”. Although this may appear negative, the statement in no way suggests that individuals are not permitted to use bitcoin, and a continual effort is made throughout the document the emphasize that the BSP does not wish to stifle innovation within the virtual currency space.
The document announces recognition on the part of the BSP that “Virtual Currency (VC) 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.”
The BSP Aims to Regulate VCs When Used for Delivery of Financial Services
The Filipino remittance industry is the third largest in the world, trailing behind only China and India. Despite being worth $30 billion USD annually, the Filipino remittance industry has seen steadily declining growth in recent years. With many bitcoin-based remittance companies offering savings of several percent when compared with conventional remittance services, the extra capital that may be injected into the Filipino economy through widespread adoption of bitcoin-based remittance is clearly something the BSP does not wish to hinder.
The reports describe a regulatory framework for virtual currencies that is very similar to the legislation that money exchange and transmitting businesses must abide. “The BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.”
Ultimately, the guidelines are positive. The BSP will not interfere with virtual currency exchanges unless money laundering or terrorist financing is suspected. Outside of such, there is no hostile sentiment toward any element of the bitcoin economy, with the BSP repeatedly expressing the desire not to stand in the way of innovation and investment within the virtual currency space.
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