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Manila Bulletin devider Business devider BSP warns public anew against virtual asset firms

BSP warns public anew against virtual asset firms

Published Feb 14, 2023 02:22 pm

The Bangko Sentral ng Pilipinas (BSP) on Tuesday, Feb. 14, has again issued a warning against transacting with virtual asset service providers (VASPs) that are unregistered and domiciled abroad or unknown foreign virtual asset companies.

The BSP said there are only 20 registered VASPs with the BSP as of end-January 2023, of which two are not yet operational and two are inactive. Of the registered VASPs, the BSP also listed four that are not operating at the moment.

In total, of the 20 that did register with the BSP, only 12 are active and in operation as of end-January.

BSP building and logo/Reuters

These 12 VASPs are: COEX STAR; Appsolutely; COINS PH; Bexpress; Bloomsolutions; Frenetic; Moneybees Forex; Maya Philippines; Philbit; PDAX; TopJuan; and Zybi Tech.

The BSP on Tuesday also reissued an August 17, 2022 public advisory reminding Filipinos that the BSP will not be able to enforce legal recourse or protect consumers such as redress mechanisms for VASPs based abroad. Dealing in virtual assets, said the BSP, are generally considered as high risk activities “which may result in huge financial losses due to price swings.”

The BSP highly encourage financial consumers to verify with the BSP if the virtual asset firm or companies they are dealing with is supervised and regulated.

Based on a Dec. 7, 2022 memo, the central bank has likewise instructed all registered VASPs not to engage in any business activities other than for the safekeeping of assets.

The BSP imposed a three-year ban on VASP licensing beginning on Sept. 1, 2022. The BSP refers to virtual currencies as virtual assets. It issued a circular to govern VASPs in 2017. The VASP regulation expands the BSP’s previous rules on virtual currency exchanges to include businesses that perform an exchange between one or more forms of virtual assets, the transfer of virtual assets and its safekeeping or adminstration.

BSP Deputy Governor Chuchi G. Fonacier said in the December 2022 memo that there are persistent threats in the virtual asset world that affect practices and endanger the safety and security of customer funds, such as what happened in the FTX debacle, a cryptocurrency that went bankrupt last year.

Fonacier said all VASPs, particularly those providing safekeeping and administration services for virtual assets such as custodians, should ensure that customers’ virtual assets are not being used for any business activities other than for safekeeping on the customers’ behalf. VASPs facilitate the conversion or exchange of fiat currency to virtual assets or vice versa.

Fonacier also reminded all VASPs to be especially critical in assessing the risk profile of liquidity providers and check the following: license and registration status; the legal and supervisory framework of the jurisdiction from which the liquidity providers are domiciled; and supervisory/enforcement capabilities of relevant regulatory bodies/enforcement agencies.

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