Digital asset firms targeting the Philippines will have to put their plans on hold at least for the next three years. The country’s central bank has announced that it has suspended the license application process for virtual asset service providers (VASPs) for three years.
In its announcement, the Bangko Sentral ng Pilipinas (BSP) said that the new modified approach to granting VASP licenses aims to strike a balance between protecting investors and promoting innovation.
“In this light, the Bangko Sentral recognizes that as VAs offer opportunities to promote greater access to financial services at reduced costs, they also pose varied risks that may undermine financial stability,” according to the memorandum, written by BSP financial supervision official Chuchi Fonacier.
The BSP has thus closed the regular application window for VASP licenses for the next three years, starting September 1.
The bank will continue to process applications that have passed Stage 2 of the process by August 31. Applications with incomplete requirements as of August 31 will be returned and will not be processed any further.
While it has closed the window for new market entrants, the BSP welcomed supervised financial institutions in the country targeting digital assets to submit their applications. Institutions interested in services such as digital asset custody can apply for the VASP license.
Commenting on the development, BSP Governor Felipe Medalla said that “recent market developments have necessitated the adoption of a modified VASP licensing approach,” without offering any specifics.
Filipinos were recently named among the most affected by Axie Infinity’s hack, being the game’s biggest market. Globally, giants like Celsius and Voyager have also collapsed this year, playing a big part in most regulators’ now-cautious approach to digital assets.
“[The new approach] strategically shifts the focus to assessing the existing Bangko Sentral-registered VASPs’ overall performance and risk management systems, their impact on financial services and financial inclusion agenda, and their contribution towards the achievement of the Digital Payments Transformation Roadmap (DPTR) objectives,” Medalla added.
Currently, there are only 19 registered VASPs in the Philippines. They include the Philippine Digital Asset Exchange (PDAX), Betur Inc. (which does business as Coins.ph), Bloomsolutions LLC, and Rebittance Inc. PayMaya, the digital payments giant which has since rebranded to Maya, is also licensed to offer digital asset services.
One of the companies that have been pushing to enter the Filipino market is Binance, but it has received pushback from regulators and consumer groups alike. Binance has reportedly submitted the necessary documents in the application process but has yet to hear back from the regulators. It’s unclear at this point whether Binance was one of the firms that had reached Stage 2 of the process. If not, the Filipino market will be out of its reach for the next three years.
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