BSP to Suspend Grant of VASP Licenses

On 26 January 2021, the Bangko Sentral ng Pilipinas (“BSP”) released the Guidelines for Virtual Asset Service Providers (“VASP”). VASP refers to any entity offering services or engaging in activities that provide facility for the transfer or exchange of virtual assets (“VAs”) and which involve the conduct of one or more of the following activities: (i) exchange between VAs and fiat currencies, (ii) exchange between one or more forms of VAs, (iii) transfers of VAs, and (iv) safekeeping and/or administration of VAs or instruments enabling control over VAs. Virtual Assets or VAs are defined as any type of digital unit that can be used for payment or investment purpose. An example of a well-known VA which use has recently proliferated in the country is cryptocurrency. Cryptocurrency transactions have continued to rise since 2020. With the volume of cryptocurrency transactions reported to have grown 362% year on year to nearly 20 million in the first half of 2021, according to data from the BSP. As of 30 June 2022, the BSP has granted a VASP license to 19 companies in the Philippines. 

However, in Memorandum No. M-2022-035 dated 10 August 2022, the BSP announced that it would be suspending the grant of new VASP licenses for three (3) years, starting 1 September 2022. The suspension is to allow the BSP time to re-assess the license granting framework based on market developments.

Applications which have already completed or passed Stage 2 of the licensing process on or before 31 August 2022 will still be processed and accessed. Applications with incomplete requirements as of 31 August 2022 will be returned and will no longer be processed.

Meanwhile, existing BSP Supervised Financial Institutions who wish to expand operations by offering VASP services, including non-custodial VASPs who wish to offer safekeeping and/or custodial services, may still apply for a VASP license provided they have a Supervisory Assessment Framework composite rating of at least “stable.”