The Bangko Sentral ng Pilipinas (“BSP”) issued Circular No. 944, Series of 2017 or the “Guidelines for Virtual Currency Exchanges” (the “Circular”). Virtual currency (“VC”) refers to any type of digital unit that is used as a medium of exchange or a form of digitally stored value created by agreement within the community of VC users. The Circular reiterates that VCs are not issued nor guaranteed by any jurisdiction and do not have a legal tender status.
The Circular covers exchanges in the Philippines, offering services or engaging in activities that provide facility for the conversion or exchange of fiat currency to VC or vice versa. The basic requirements for a Remittance and Transfer Company (“RTC”) such as registration, minimum capital, internal controls, regulatory reports and compliance with the Anti-Money Laundering Act, as amended, and its implementing rules and regulations, shall likewise apply to VC exchanges.
To be qualified to engage in VC exchange activities, a Certificate of Registration (“COR”) to operate as an RTC must be obtained from the BSP. Large value pay-outs of more than PhP 500,000.00 or its foreign currency equivalent, in any single transaction with customers or counterparties, shall only be made via check payment or direct credit to deposit accounts. Depending on the complexity of VC operations and business models adopted, a VC exchange shall put in place adequate risk management and security control mechanisms to address, manage and mitigate technology risks associated with VCs. The Circular also provides sanctions for failure to comply with the requirements provided for engaging in a VC exchange, which range from written reprimand to disqualification and cancellation of registration.