BSP clears 2 more cryptocurrency operators
The Bangko Sentral ng Pilipinas (BSP) has given Fyntegrate Inc. and ZyBi Tech Inc. the green light to operate virtual currency (VC) exchanges amid the steady rise in the volume of transactions in country.
BSP Deputy Governor Chuchi Fonacier said the approval brought to seven the number of VC exchanges operating in the country that includes Betur Inc., Rebittance Inc., BloomSolutions, ETranss and Virtual Currency Philippines Inc.
Cryptocurrency is a type of VC that uses cryptography – a method of storing and transmitting data in unreadable form so that only the intended receivers can read and process it. Bitcoin is the first and most popular cryptocurrency to date introduced in 2009.
Latest data from the BSP showed conversion of virtual currencies into peso and other currencies amounted to $24.16 million, while conversion from peso and other currencies to virtual currencies reached $36.74 million in the first quarter of the year.
In the fourth quarter of last year, the average monthly transactions involving conversion of virtual currencies to peso and other currencies reached $24.79 million, while conversion from peso and other currencies to virtual currencies amounted to $38.27 million.
Following the rise in the use of VCs for payments and remittances in the Philippines, the BSP established a formal regulatory framework for VC Exchanges through Circular 944 dated Feb. 6 2017.
The circular requires VC exchanges to register with the BSP as remittance and transfer companies. These exchanges are also required to put in place adequate safeguards to address the risks associated with VCs, including control measures to counter money launder- ing/ terrorist financing, technology risk management systems, and consumer protection mechanisms.
The central bank issued Circular 942 in January last year laying down the rules and regulations governing the operations and reporting obligations of non-bank entities engaged in remittance, money changing, and foreign exchange dealing, pursuant to Republic Act 9160 or the Anti-Money Laundering Act (AMLA) of 2001 and RA 7653 or The New Central Bank Act.
In a study of the transaction profile of accredited VC exchanges in the Philippines titled “Strengthening anti-money laundering surveillance alongside advancements in financial technology,” the Anti-Money Laundering Council the BSP’s establishment of a regulatory framework for VC exchanges has strengthened safeguards against risks associated with VCs such as controls on anti-money laundering and terrorist financing, technology risk management, and consumer protection.
“In particular, the inclusion of VC exchanges as covered persons has allowed for more comprehensive monitoring of the financial behavior of individuals and entities possibly connected to illicit activities as well as closer coordination and information sharing among covered persons in the conduct of AML surveillance, as gleaned from the narratives submitted by the VC exchanges,” AMLC said.
It added the prevalence of fraudulent activities using VC exchanges as a channel may be curbed through the imposition of lower thresholds for the amount, volume, and frequency of transactions that take place in an account as well as more stringent Know Your Customer procedures, and more rigid due diligence standards for VC exchanges’ payment partners.