Although the global environment for cryptocurrency adoption is getting more favourable day by day, the fear, doubt, and uncertainty around it is still a hindrance to it being accepted as a common form of currency and store of value. Although digital assets have managed to make a strong presence in the US, some European countries, Japan, and North Korea, the picture in the rest of Asia is still poor.

However, the Philippines seemed to come forward to change the situation. According to recent reports, the country has allowed 48 crypto exchanges to conduct business in its soil. Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines has enlisted 11 new crypto exchanges as legal operators. 37 more exchanges have been licensed by the government-backed Cagayan Economic Zone Authority.

The central bank registered companies

According to the most recent list of Remittance and Transfer Companies with Money Changing or Foreign Exchange Dealing and Virtual Currency (VC) Exchange Service the new 11 licensees are Etranss Remittance International Corp., Aba Global Philippines Inc., Betur Inc. dba, Virtual Currency Philippines Inc., Rebittance Inc., Bloomsolutions Inc., Coinville Phils Inc., Bitan Moneytech Co. Ltd, Zybi Tech Inc., Fyntegrate Inc., and Bexpress Inc.

The central bank issued cryptocurrency regulation through a circular in February 2017. Since then companies willing to do the business of exchanging cryptocurrencies for fiat money are required to register with the central bank as remittance and transfer companies. The government is still strict on misuse of virtual currencies. According to the central bank- 

“BSP-registered VC exchanges are now required to put in place adequate safeguards to address the risks associated with VCs such as basic controls on anti-money laundering and terrorist financing, technology risk management and consumer protection.”

Regulations for companies not registered with the central bank

The regulation applies to crypto ATMs as well. According to the central bank circular of June 13, no individual or entity can install crypto ATM in the Philippines or manage online sites for them. To operate as legal firms, ATM owners must register with the central bank as virtual currency exchanges. BSP also requires firms preparing to issue initial coin offerings to get separate approval from the Securities and Exchange Commission. In addition to the companies registered by the BSP, a good number of firms have got a license from the Cagayan Economic Zone Authority (CEZA) to run their VC exchange business.

The government-owned body CEZA manages and supervises the development of the Cagayan Special Economic Zone and Freeport, a large area in the northeastern part of the country. The main objective of CEZA is to create employment opportunities for the citizens in and around the Freeport. Foreign companies are given special advantages and incentives for doing business there. The CEO and administrator of CEZA Raul L. Lambino stated-
“We are making CEZA a sandbox for the development of these disruptive technologies, serving as a laboratory for interested parties to experiment on these new dimensions of business enterprise.”

CEZA follows its “Financial Technology Solutions and Offshore Virtual Currency Exchange (OVCE) Business Rules and Regulations of 2018” for registration of new exchange companies. Among the 37 newly enlisted companies, twenty-four got the OVCE Principal license and the remainder got the OVCE Regular license. The Principal license holders can conduct both offshore fintech business and crypto exchange activities while the regular Regular license holders can only conduct offshore crypto exchange activities.

CEZA is adding a new dimension to the economic environment of the region by building Crypto Valley of Asia. Companies operating in the Cagayan Special Economic Zone and Freeport will get the advantage of the project. In the initial phase, a 25-shop housing development inside the cyberpark will be created. CEZA has planned providing all kinds of amenities favouring crypto business- “Soon to also rise in the crypto valley are a world-class internet data center, crypto-mining firms, self-contained power production facilities, and state-of-the-art cybersecurity and risk assessment facility.”

The BSP believes that virtual currency system can revolutionize financial services delivery. The governor confessed that cryptocurrencies are a medium of exchange and the central bank recognized that. The softer stance of the BSP will certainly allow the market to grow and create new financial opportunities in the Philippines.