The Bangko Sentral ng Pilipinas (BSP) is about to issue revised guidelines on virtual currency exchanges (VCEs) and electronic money issuers (EMIs) to plug the regulatory gaps of the existing virtual asset service providers (VASP) rules.
“Once issued (the revised) circular will address identified gaps by the Financial Action Task Force Guidance for a risk-based approach on VASPs,” said BSP Governor Benjamin E. Diokno.
The ongoing review to the VCE and EMI framework was prompted by what Diokno said was the accelerated growth on the use of EMIs and VCEs which has “driven the BSP to amend BSP Circular No. 649 and BSP Circular No. 944, respectively, to be aligned with the fintech industry’s best practices.”
“As such, updates to BSP Circular No. 649 is currently ongoing, while the amendments for BSP Circular No. 944 is in its final phase,” he said during the online “Digitization Developments and Initiatives” event by Citibank.
Diokno said the proposed circular will update the guidelines for virtual assets and VASP. He said the purpose is to “enhance the BSP’s regulatory and supervisory response to money service business activities harnessing the technology of virtual currencies (VC), in line with international standards for anti-money laundering (AML) and countering the financing of terrorism (CFT).”
Diokno added that the revisions to the rules will “ensure that activities relating to VASP are executed within an unbroken chain of regulated entities.”
During the Citibank event, Diokno reiterated the BSP’s ongoing study of issuing its own central bank digital currency (CBDC).
He cites the Bank of International Settlement (BIS) description of CBDCs which are a “new form of digital central bank money that can be distinguished from reserves or settlement balances held by commercial banks at central banks.”
“Hence, CBDCs may be considered legal money and should not be intertwined with cryptocurrencies, which are decentralized digital currencies based on blockchain technology,” said Diokno.
A BSP technical working group is presently doing an in-depth study on both the feasibility and policy implications of issuing a CBDC, said Diokno.