BSP imposes 3-year ban on virtual currency-related licenses – Manila Bulletin

The Bangko Sentral ng Pilipinas (BSP) imposes a three-year moratorium on licensing of Virtual Asset Service Providers (VASPs) as it reviews the local market for trading virtual assets or digital currencies.

In a memo (Memorandum Order M-2022-035) she signed on August 10, BSP Deputy Governor Chuchi G. Fonacier said the regular application window for new VASP licenses will be closed. for three years starting next month, September 1.

Fonacier, currently governor in charge of the BSP, said that the BSP will reassess market developments during the ban on new VASP licenses.

Virtual Currency/Virtual Assets (Manila Bulletin article)

BSP refers to virtual currencies as virtual assets. It issued a circular to govern VASPs in 2017. The VASP regulation expands previous BSP rules on virtual currency exchanges to include businesses that engage in an exchange between one or more forms of virtual assets, the transfer of assets assets and custody or administration of virtual assets. assets.

Fonacier called the moratorium a “modified approach” in granting VASP licenses that was approved by the BSP’s Monetary Board on August 4.

She said the ban is BSP’s way of striking a balance between promoting innovation in the financial sector “and ensuring that associated risks remain at manageable levels.” At the end of June, the BSP supervises 19 PSAVs.

With respect to all pending VASP license applications, Fonacier stated that applicants who completed or passed Stage 2 of the licensing process on or

before August 31 will still be processed and evaluated for completeness and sufficiency of documentation as well as compliance with licensing criteria to operate as a VASP based on Stage 3 requirements.

In the meantime, all VASP applications that are deemed incomplete by August 31 will be considered “closed” applications. “The Bangko Sentral will not process these requests further,” Fonacier said.

As for existing BSP supervised financial institutions (BSFl) intending to offer VASP services, including non-custodial VASPs for custodial and custodial services, Fonacier can still apply for a license if it has a rating “stable” composite of the prudential assessment framework (SAFr). Particular attention will be paid to OSFI’s risk management systems, including its client suitability assessment and onboarding processes, as well as financial consumer education and awareness programs when assessing of his candidacy, she added.

Fonancier said the BSP recognizes that virtual assets offer opportunities to “promote greater access to financial services at reduced costs, they also present varied risks that can undermine financial stability.”

“In this regard, the regular application window for new VASP licenses will be closed for three years, subject to reassessment based on market developments,” she said.

The last time the BSP made changes to its VASP rules was in early 2021 when it updated and revised its rules on the exchange of virtual assets by expanding the guidelines covering currency exchanges. virtual machines and VASP registration and licensing.

Last year’s changes closed regulatory gaps in existing VASP regulations that were previously identified by the Financial Action Task Force (FATF) after it issued its guidance for a risk-based approach to virtual assets and virtual assets. virtual asset service providers in 2019 in response to new technologies, services and products. The FATF has described VASPs as entities that facilitate financial services through the conduct of virtual asset activities.

The BSP has amended its 2017 guidelines on virtual currency exchanges to also cover new business models and activities. The update is also aligned with fintech or financial technology company best practices and complies with risk management standards set by international standards bodies such as the FATF.

On June 25, 2021, the FATF placed the Philippines on its “grey list” as a country with strategic deficiencies in AML/CFT or AML/CTF regulation.

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