BSP accredits two VC exchanges

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FACADE of the Bangko Sentral ng Pilipinas (BSP) along East Avenue, Quezon City, October 27, 2014 — BW FILE PHOTO

By Melissa Luz T. Lopez, Senior Reporter

TWO NEW digital currency exchanges have been accredited by the Bangko Sentral ng Pilipinas (BSP), a senior official said.

BSP Deputy Governor Chuchi G. Fonacier said the regulator has approved applications filed by Virtual Currency Philippines, Inc. and ETranss as platforms to convert pesos into virtual currencies (VC) like bitcoin and ethereum.

This brings the approved VC exchanges to five, alongside Rebittance, Inc. and Betur, Inc. (better known as and BloomSolutions.

These digital currencies can be used for paying goods sold through the Internet and even stand as a form of investment due to changing valuations. It is a form of digital money that is not issued or guaranteed by a central bank, and can be sent or received by anonymous users internationally.

The BSP has recognized the benefits of using electronic currencies in terms of faster and cheaper remittances. However, it has stood wary given risks of rapidly changing values, potential use for crimes, and cybersecurity concerns.

Conversions from the peso to digital currencies have grown exponentially over the past few years. In the first quarter, amounts averaged $36.74 million per month covering transactions from two registered exchanges.

Monthly volumes hit $38.27 million between October and December last year.

Amid buoyant activity, the Anti-Money Laundering Council has said they will start looking at VC transactions as part of its tighter watch against dirty money, given that these firms are also required to submit covered and suspicious transactions.

Meanwhile, Ms. Fonacier said that the BSP will unlikely proceed with the earlier proposal requiring VC exchanges to secure separate licenses to operate as electronic money issuers.

Previously, the central bank official said they are studying whether these exchanges need to sign up as e-money issuers given that they maintain e-wallets for clients. Ms. Fonacier said internal consultations showed that it may not be advisable, in a bid to keep the registration process simple for these new players.

“Now, we are refining the rules… If your business model has a portion making use of e-wallet, then there’s an additional requirement but not necessarily or automatically an e-money license,” Ms. Fonacier told reporters in an ambush interview.

Signing up as e-money issuers will require VC exchanges to hold a minimum capital of P100 million. Existing BSP rules also impose P100,000 as the aggregate load limit for e-money instruments per month.

Bitcoin values have fluctuated from around $1,000 in January 2017 to a peak of nearly $19,346.60 apiece on Dec. 17. It is currently trading above the $6,000 level with $114.56 billion in total market capitalization, according to its website.