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Manila Bulletin devider Business devider BSP to lift ban on e-money selectively

BSP to lift ban on e-money selectively

Published Nov 22, 2022 03:39 pm

Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said they are studying the selective lifting of the two-year moratorium on electronic money issuers (EMI).

“We’re looking at smarter ways (for the) selective lifting of the moratorium so that we keep out the bad guys,” said Medalla in a FinTech Alliance INDX 2.0 forum on the digital economy on Tuesday, Nov. 22.

E-money transactions

The term e-money is described as electronically-stored cash in an instrument or device such as cash cards, e-wallets accessible via mobile phones or other access device.

Medalla said the two-year ban on e-money application, imposed last December 2021, was implemented to prevent its misuse.

“We notice some of the people are applying not to use them but just to sit on the license and hope they can sell it to somebody else,” he said.

The BSP chief also mentioned the three-year moratorium on virtual asset service providers’ (VASPs) licensing which was imposed in September this year.

Medalla said the ban on VASPs was implemented to prevent the population of scammers from further increasing. “There are a lot of scammers out there and eventually some of these scammed, they will blame the regulator,” he said. The BSP has always warned the public of frauds and scams related to virtual asset-based crimes.

The central bank closed the EMI application window for both banks and non-banks to allow the BSP to monitor the EMI sector and to ensure financial stability.

All applications for EMI license received until Dec. 15 last year was processed on a first-come, first-served basis. The BSP received 36 applications before the moratorium, of which 18 made it to the processing stage, while the other half were denied due to incomplete and insufficient documentation submitted to the BSP.

When the BSP imposed the moratorium, it was supervising 34 registered and licensed non-bank EMIs including GCash, PayMaya and GrabPay. The BSP is also monitoring 29 bank-owned EMIs.

The BSP has earlier proposed to increase EMI’s required minimum capital from P100 million to P200 million with transactions of P25 billion or more.

The required capital will also depend on the EMI size, regardless if owned by a bank or a non-bank financial institution. For large scale EMIs, both bank-owned and those owned by non-bank financial institutions, the minimum required capital is P200 million. For the small scale EMIs, it is P100 million.

Meantime, the BSP has 19 VASPs under supervision before the moratorium. The licensing ban is described by the BSP as a modified approach which involved the closure of the regular application window for new VASP licenses for a period of three years and grant of new VASP licenses only to existing BSP supervised financial institutions (BSFIs).

The modified approach to VASP licensing gives them more time to assess the existing VASPs' overall performance and risk management systems, as well as to monitor their impact on financial services and financial inclusion agenda, and their place in the BSP’s Digital Payments Transformation Roadmap.

Under the modified approach, the BSP said existing BSFIs with strong risk management systems may still apply for a VASP license.

The BSP refers to virtual currencies as virtual assets.

Before the ban was imposed, the BSP issued a strong public warning against unregistered VASPs which are high risks and could lead to huge financial losses due to price swings.

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