Central bank sets indefinite moratorium on grant of new licenses to virtual asset service providers

THE BANGKO SENTRAL ng Pilipinas (BSP) has extended indefinitely its moratorium on the grant of new virtual asset service provider (VASP) licenses as it noted “heightened risks” in the sector.

“The extension of the moratorium considers the heightened risks associated with virtual assets (VAs) and underscores the BSP’s commitment to protect consumers and uphold the stability and integrity of the financial system,” the central bank said in a statement on Friday.

“The BSP will periodically review the moratorium on VASP licensing in line with industry developments, as it strengthens its monitoring, surveillance, and enforcement capabilities. This approach ensures that the BSP can effectively address emerging risks and respond to evolving trends in the domestic and global VA landscape.”

The central bank added that enhanced monitoring of VASPs is also part of its efforts to strengthen its anti-money laundering, counter-terrorism financing (AML/CFT), and counter-proliferation financing of weapons of mass destruction framework following the Philippines’ removal from the Financial Action Task Force’s (FATF) “gray list” of jurisdictions under increased monitoring in February this year.

This close monitoring is meant to ensure that these entities operate “in full compliance with regulations and international standards, and implement secure, transparent, and accountable practices.”

The Anti-Money Laundering Council (AMLC) earlier said it is pushing amendments to the Anti-Money Laundering Act that could include the authority to temporarily suspend transactions and the designation of VASP as covered persons under the revised international standards and FATF recommendations.

The FATF has said that countries must ensure VASPs are regulated for AML/CFT as “virtual assets also risk becoming a safe haven for the financial transactions of criminals and terrorists.” These providers must also be licensed or registered, and subject to effective systems for monitoring.

The BSP initially imposed a three-year moratorium on new VASP licenses in September 2022.

Virtual assets refer to any digital representation of value that can be traded online, transferred, or used for payment, including cryptocurrencies.

VASPs offer services or engage in activities that provide facilities for the safekeeping, administration, transfer or exchange of virtual assets, such as cryptocurrency exchanges. The products and services of VASPs include cryptocurrencies and electronic wallets for holding and storing these virtual assets.

BSP data showed that 13 entities held VASP licenses as of May 15, with three of them being inactive or nonoperational.

In an advisory also issued on Friday, the central bank warned the public against dealing with unlicensed or unauthorized VASPs, adding that the official list of registered VASPs is available on its website.

It also encouraged the reporting of any illegal or suspicious activities related to VAs or VASPs to the BSP. — K.K. Chan