BSP studying more regulation for cryptocurrencies

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The Bangko Sentral ng Pilipinas headquarters in Manila -- BW file photo

THE Bangko Sentral ng Pilipinas (BSP) said it may require cryptocurrency firms to register as electronic money issuers on top of securing a license as a virtual currency (VC) exchange operator.

Initial studies made by the central bank point to the possible need for enhanced oversight over financial firms issuing digital currencies, BSP Deputy Governor Chuchi G. Fonacier said, which would also entail bigger capital requirements.

“We are carefully reviewing or assessing whether just the registration of being a virtual currency exchange per se would suffice. The way things are right now, the business models that they are presenting to us might require another layer of authorization,” Ms. Fonacier told reporters on the sidelines of the Chamber of Thrift Banks national convention today, April 10.

Evaluating the business models submitted by these virtual currency issuers, Ms. Fonacier said companies might need to register as e-money issuers (EMI) under the BSP’s regulation.

“If the business model requires them (clients) to maintain a wallet, then it is but proper that they would be required to obtain an EMI license,” the central bank official said.

Signing up as e-money issuers will require exchanges to carry a minimum capital of P100 million — an amount bigger than what is required of rural banks, Ms. Fonacier said.

Existing BSP rules also impose P100,000 as the aggregate load limit for e-money instruments per month.

In February 2017, the BSP stepped up to regulate firms which convert cash into virtual currencies like Bitcoin and Ethereum, imposing some requirements for risk management and to guard against transactions that may provide cover for money laundering.

The BSP has so far accredited two virtual currency exchanges: Rebittance, Inc. and Betur, Inc. more popularly known as Ms. Fonacier said the bank is reviewing applications from 29 other cryptocurrency firms.

The regulator issued its first public warning on the use of digital currencies in March 2014, when foreign regulators banned banks and brokers from handling the new currency following the collapse of Mt. Gox, a Tokyo-based Bitcoin exchange.

Digital currencies are not issued or guaranteed by a central bank, and can be sent or received by anonymous users internationally.

The BSP recognizes the benefits of using electronic currencies in terms of faster and cheaper remittances, but warned of the risk of rapidly changing values, potential use for crime, and cybersecurity concerns.

Bitcoin values have fluctuated from around $1,000 in January 2017 to a peak of nearly $20,000 apiece in December. Bitcoin is currently trading at the $6,000 level, according to its website. — Melissa Luz T. Lopez