Philippines Central Bank to Suspend Issuing Licenses to New Virtual Asset Service Firms

The Bangko Sentral ng Pilipinas, the Central bank of the Philippines, announced on Thursday that it would close the regular application window for new virtual asset services providers (VASP) licenses for a period of three years beginning September 1.

VASPs are firms that offer certain services associated with virtual assets or cryptocurrencies such as Bitcoin.

The Philippine Central Bank said it reached the move because it wants "to strike a balance between promoting innovation in the financial sector and ensuring that associated risks remain within manageable levels."

The regulator stated it would conduct a reassessment based on market developments. In other words, the strategic change would enable the watchdog to monitor the performance of current market players and the risks they pose to the financial industry. The agency further said the move would allow it to assess the impacts of existing digital asset providers concerning the country's financial inclusion and digital payments transformation objectives.

The Bangko Sentral said that central bank-supervised institutions that intend to expand offerings to virtual-asset services like custody may still apply for a license.

The regulator stated that all applications that have completed stage 2 of the bank's licensing process by August 31 August would be processed and assessed as normal.

The agency noted that applications with incomplete requirements would be returned and considered closed.

The central bank will no longer accept new applications starting September 1.

Virtual Assets on The Rise

At the end of June, the Philippine Central Bank approved 16 new virtual asset services providers to operate in the local markets.

In December last year, the regulator reminded the public to transact only with central bank-registered Virtual Asset Service Providers (VASPs) as transactions involving digital assets continued to rise rapidly.

The agency advised the public to be vigilant in their dealings involving VAs, which are not considered legal tender and not insured by the Philippine Deposit Insurance Corporation.

The regulator further mentioned that registered VASPs are mandated to comply with regulations that promote operational soundness and provision of quality services and ensure appropriate consumer protection.

As of June 2021, virtual currency transactions in the Philippines reached 19.88 million, an increase of 362% from the 4.31 million recorded in the previous year. Such transactions translated to P105.93 billion in value, an increase of 71% from P62.12 billion over the same period.