Bangko Sentral ng Pilipinas (BSP), the top financial regulator in the Philippines, has tightened crypto rules to help prevent money laundering in the country. A report unveiled this news on January 26, noting that the central bank now mandates that all crypto transactions adhere to its regulations on financial service providers. BSP noted that its Monetary Board recently greenlighted the guidelines on virtual asset service providers (VASPs) to include new business models and activities.
According to the report, the BSP’s regulatory scope has expanded under the new guidelines to include several facets of virtual assets. This involves their exchange, transfer, safekeeping, and administration. Instruments that facilitate the control of virtual assets will also be subject to BSP’s licensing requirements and regulatory expectations.
Per BSP’s chairman, Benjamin Diokno, the country has seen rapid growth in the use of virtual currency exchanges in the past three years. As such, the regulator deemed it fit to expand the scope of existing regulations to effectively address issues associated with the crypto space.
Enforcing regulations that foster innovation
The new guidelines amended the regulations on virtual currency exchanges, which came into effect in 2017. According to the regulator, these amendments align with its efforts to foster financial innovation while observing the associated risks. BSP added that the new virtual asset service provider framework is in line with the FinTech industry’s best practices. Additionally, it is in tandem with risk management standards formulated by international standard entities, such as the Financial Action Task Force (FATF), to fight the illegal transfer of funds.
Reportedly, the new framework will need VASPs that provide custody services to meet a minimum capital requirement of 50 million Philippine pesos (approximately £760,000). On the other hand, regular VASPs will need a lesser amount of 10 million Philippine pesos (£151,500) to start operations in the country.
Additionally, VASPs would have to conduct due diligence on their customers and would have to treat crypto transactions as cross-border wire transfers. The firms would also need to record the data of individuals that transact more than 50,000 pesos (£760).
According to Diokno, these measures would ensure that all activities related to digital asset providers are completed within an unbroken chain of regulated agencies.
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