Philippines Issues Regulations for Bitcoin Exchanges
The Philippine central bank has released new regulatory guidelines for bitcoin exchanges in the country.
Titled “Guidelines for Virtual Currency (VC) Exchanges” [PDF], the Bangko Sentral ng Pilipinas (BSP) has moved to regulate bitcoin exchanges, having previously deemed virtual currency operators as equivalents to remittance companies.
BSP Circular No. 944 was issued on Monday this week after the country’s Monetary Board approved a list of rules and regulations as mandatory operating guidelines for bitcoin exchanges operating in the country. The guidelines were first approved on 19 January before its public release this week.
Introducing the guidelines, the BSP’s policy sees virtual currencies to revolutionize payments and remittance in a country that is the third largest recipient of remittance in the world. According to estimates, nearly $30 billion, or about 10 percent of the country’s GDP came in as remittance in 2015. The efficiency of virtual currencies with quicker and cheaper international transfers, the bank states, could also lead to financial inclusion to the unbanked.
Still, the apex bank stated firmly:
The Bangko Sentral does not intend to endorse any VC, such as bitcoin, as a currency since it is neither issued or guaranteed by a central bank or backed by any commodity. Rather, 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.
The guidelines come within months of the central bank’s deputy governor publicly revealing discussions toward regulating operators of digital currency exchanges in the country.
Guidelines for Bitcoin Exchanges
The circular lays out a number of requirements that aren’t indifferent to those by issued by authorities around the world. Registration and annual service fees will have to be paid by exchanges after obtaining the ‘Certificate of Registration’ (COR) to operate as an approved exchange.
Large payouts or transfers of over P500,000 (approx. $10,000) in a single transaction will have to be made via a check payment or direct bank transfer deposit to crediting accounts.
Further, the central bank demands adequate cybersecurity infrastructure to safeguard customers’ accounts and mitigate them from technology risks.
Elaborating on the requirement, an excerpt from the circular read:
For VC exchanges providing wallet services for holding, storing and transferring VCs, an effective cybersecurity program encompassing storage and transaction security requirements as well as sound key management practices must be established to ensure the integrity and security of VC transactions and wallets.
Bitcoin and virtual currency exchanges will also be required to submit quarterly reports of total volumes and value of virtual currencies transacted alongside a list of their physical offices and websites of operation. Audited financial statements are to be turned in annually.
Sanctions and law enforcement actions for violations of the requirements are also listed. They vary from disqualification and cancellation of registration to anti-money laundering penalties to other penalties and sanctions under local applicable laws.
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