12 players waiting for BSP approval to operate Bitcoin exchange in PH as local transactions rise 4-fold
MANILA — Twelve entities have applied with the Bangko Sentral ng Pilipinas’ (BSP) to operate as Bitcoin exchanges in the country amid the sharp rise in virtual currency (VC) transactions.
In a briefing Wednesday, Melchor Plabasan, Deputy Director and Head of Core Information Technology Specialist Group, said applicants have to go through a two-tiered process – evaluation of the business model and completion of documentary requirements – before they could be allowed to operate in the country.
“But a lot of the applications are progressing now,” he said.
Plabasan said these entities were incorporated in the country but were mostly owned by foreigners.
“Basically, they are considered as fintech (financial technology) players,” he said.
The BSP executive said VC companies were attracted to open business in the Philippines because of the large number of young people, the high penetration of social media platforms, the growing information technology and the business process outsourcing sectors and the large volume of remittance being sent home by Filipino workers overseas.
He said more Filipinos were encouraged to tap VCs to remit money because savings on fees – 1 percent to 3 percent of the amount being sent versus the 8 percent to 12 percent fees through traditional channels.
He, however, stressed that VC transactions remained risky because of VCs’ volatility, the high chances of Bitcoin wallet value being stolen digitally, and transactions were non-refundable.
The central bank has approved the operation of two entities involved in Bitcoin exchange and these were classified as remittance companies that were required to meet rules on anti-money laundering.
Plabasan said latest transaction data from these two companies, namely Rebittance and Bitour or Coins.ph, showed a big jump in local VC transactions to an average f $8 million a month from $2 million in 2015.
VCs were introduced sometime in 2009 and have been largely used for online transactions to purchase virtual goods, such as online gaming environment and social networks, as well as real goods and services provided by retailers and restaurants.
On Feb. 6, 2017, the central bank issued Circular No. 944 requiring companies that intend to transact VCs to register as remittance and transfer companies (RTCs). Three years ago, the central bank issued a warning urging the public to take caution in using VCs as they remain unregulated.
Plabasan stressed that VC transactions were still unregulated: “You can’t get any legal protection”.
He said the central bank continued to monitor VC transactions since other central banks had either banned or ordered the shutdown of exchanges for digital currencies.
He said the BSP had adopted the risk-based approach on VCs being implemented by the Financial Action Task Force since these were targeted, decentralized, and cross-border.
“We do not endorse virtual currency as a currency because it is not a currency,” he said.