The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved the guidelines on virtual asset service providers (VASP) and entities that facilitate financial services through the conduct of virtual asset (VA) activities.

The said guidelines amended the regulations on virtual currency exchanges (VCE) that were issued in 2017.

The board-approved framework expanded the activities subject to the licensing regime of the BSP from initially covering those involved in facilitating the exchange of fiat and VA.

The exchange between one or more forms of VAs, transfer of VAs and safekeeping and/or administration of VAs or instruments enabling control over VAs will be subject to the BSP’s licensing requirements, regulatory expectations for money service businesses (MSB), as well as anti-money laundering, countering the financing of terrorism and proliferation financing (AML/CFT/PF) obligations.

The VASP regulatory framework is aligned with fintech industry’s best practices and is consistent with risk management standards set by international standard-setting bodies such as the Financial Action Task Force (FATF) on AML/CFT/PF.

The new framework also emphasises that all transactions involving the transfer of VA shall be treated as cross-border wire transfer and that VASPs are expected to comply with corresponding BSP rules governing wire transfer, particularly on the obligation to provide immediate and secure transmittal of originator and beneficiary information from one VASP to another for certain transactions.

Meanwhile, other existing rules and regulations for MSBs, such as those on outsourcing, liquidity risk management, operational risk management, information technology risk management, and financial consumer protection must be complied with upon securing the authority to perform VASP activities from BSP.

Benjamin E. Diokno, Governor of Bangko Sentral ng Pilipinas said,

““This will ensure that activities relating to VASP are executed within an unbroken chain of regulated entities.

 

We have seen accelerated growth in the use VCEs in the past three years and it is high time that we broaden the scope of existing regulations in recognition of the evolving nature of this financial innovation and set out commensurate risk management expectations.”

Featured Image Credit: Bangko Sentral ng Pilipinas (BSP)