GUIDELINES ON VIRTUAL ASSET SERVICE PROVIDERS OKAYED

THE Bangko Sentral ng Pilipinas (BSP) announced on Tuesday that it has approved the guidelines on virtual asset service providers (VASP) to promote financial innovation.

VASPS are defined by the Financial Action Task Force (FATF) as businesses that facilitate virtual asset (VA) activities on behalf of their clients.

These guidelines amended the regulations on virtual currency exchanges (VCE) that were issued in 2017.

“we have seen accelerated growth in the use of VCES in the past three years and it is high time that we broaden the scope of existing regulations in recognition of the evolving nature of this financial innovation and set out commensurate risk management expectations,” BSP Governor Benjamin Diokno said.

The framework expanded the activities subject to the licensing regime of the BSP. Initially, BSP’S scope only covered those involved in facilitating the exchange of fiat and VA.

with the new guidelines, the exchange between one or more forms of VAS, transfer of VAS and safekeeping and administration of VAS or instruments enabling control over VAS are now subject to the

BSP’S licensing requirements, regulatory expectations for money service businesses (MSB), anti-money laundering, countering the financing of terrorism and proliferation financing obligations.

The BSP also said the VASP regulatory framework is aligned with fintech industry’s best practices and is consistent with risk management standards set by international standard-setting bodies such as the FATF.

“This will ensure that activities relating to VASP are executed within an unbroken chain of regulated entities,” Diokno said.

Other existing rules and regulations for MSBS, such as those on outsourcing, liquidity risk management, operational risk management, information technology risk management, and financial consumer protection, must also be complied with upon securing the authority to perform VASP activities from BSP.

“The issuance of the VASP guidelines is in line with the BSP’S commitment to remain responsive to technological developments by espousing a balanced and coherent approach in supervising financial technology innovation,” the BSP said.