VC remittance transactions rising – BSP chief

The central bank has monitored a rising trend in the use of virtual currency (VC) exchanges of remittance and transfer companies or RTCs and are reviewing registration applications of VC or bitcoins users.

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said so far, they have registered two remittance operators engaged in VCs, otherwise known at bitcoins, and these are local companies with international operations. As far as the BSP is concerned, entities that deal in VC exchanges will be considered as companies transacting money or value transfer services and as per BSP rules on money businesses, these will be categorized as RTCs.

Espenilla said they have noted a significant increase in bitcoin transactions, from just $2 million two years ago to $6 million per day today and this is just for bitcoins.

Registering VC transactions is just one of the requirements of the BSP. These RTCs will also have to maintain the desired minimum capital at least, to have internal controls, regulatory reports and compliance with the Anti-Money Laundering Act.

Espenilla said the exchange of VCs – which are any type of digital unit used as a medium of exchange – are growing in the country.

”That’s the reason why we created the requirement (to register) because we are seeing rapid increase in the trajectory. It’s coming from a small base to begin with but growing fast so we decided it’s time to increase the engagement by requiring a registration process.”

Espenilla said VC regulation is “still a work in progress” and the BSP is very aware of its risks and its possible use for illegal activities. “The value of VCs can go up and down and can be stolen,” he cautioned.

The central bank took notice of increased bitcoins use in remittance transactions last year and have already started the audit of remittance agencies based on their risk techniques.

BSP Circular No. 944 or the “Guidelines for Virtual Currency Exchanges” was approved only in February this year. This will primarily ensure that consumers will be protected and that the Philippines will not be a hot bed for money laundering or terrorist financ- ing activities in the use of VCs.

The BSP rules will only cover entities that transact the exchange or conversion of VC which are “crucial links” with the financial system, and not the so-called VC creators.