The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) has given the go-ahead signal for banks and other financial institutions to experiment with digital products. Also known as a regulatory sandbox, the Test and Learn Framework will serve as an incubation hub for innovative financial offers for consumers.
The Sandbox will run for 12 months, with each project undergoing a four-stage process involving application, evaluation, testing, and exit. At the end of the period, the BSP will entertain its suitability on whether or not it is fit for “mass adoption.”
“Insights from the regulatory sandbox projects will inform the development of policies necessary to regulate the activities within and around new or emerging financial solutions,” read the report. It further added that it will adopt a cautious approach while keeping an eye on the risks associated with the technology.
“The BSP has always championed responsible innovation since we see it as a catalyst to promote efficiency in the financial system and expand financial inclusion,” said Felipe Medalla, BSP Governor. “We are deeply committed to ensuring that attendant risks in using new technologies are effectively managed through enabling and responsive regulations.”
For projects that do not wish to go through the entire 12-month cycle, the BSP provides a shorter assessment period known as “Regulatory Sandbox Lite.” The central bank notes that it is designed for only “products or services that are already within the scope of existing regulations.” Meanwhile, digital financial products considered revolutionary must undergo the complete assessment cycle.
BSP appeals to legislators for an efficient framework
The BSP has reached out to the Philippine legislature, specifically the House Committee on Banks, Financial Institutions, and Currencies, over the need for tailor-made regulation for the digital asset industry. The bank cited the need to protect investors and prevent misuse by bad actors.
In the absence of comprehensive legislation, the banking regulator imposed a ban on the issuance of new licenses to virtual asset service providers (VASPs). In a memorandum signed by Deputy Governor Chuchi Fonacier, the ban took effect from September 1 and will last for three years.
However, financial institutions already supervised by the BSP that wish to expand to VASP services can apply within the three-year period on the condition that they have a “stable” rating from the supervisory assessment framework.
Binance has staked a claim to operate in the country by announcing that it was working on acquiring a VASP license.
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