Philippines eyes payment operator registration freeze, tighter VASP checks
The Philippines' central bank has proposed a 12-month freeze on new payment operator registrations while implementing stricter oversight of arrangements involving virtual asset service providers. The measure aims to allow regulators to conduct a comprehensive review of their licensing framework and taxonomy.
Why It Matters
This regulatory action reflects growing concerns about financial stability and consumer protection in cryptocurrency-related services, as authorities seek to tighten controls over entities operating at the intersection of traditional finance and digital assets.
Key Facts
- Proposed freeze duration: 12 months on new payment-system operator registrations
- Regulatory body: Bangko Sentral ng Pilipinas (BSP)
- Key requirement: Direct merchant arrangements between institutions and licensed VASPs with enhanced due diligence and transaction limits
- Implementation timeline: 15 days after publication if finalized
- Affected entities: Virtual asset firms licensed, registered, or authorized by BSP, SEC, or other authorities
The Bangko Sentral ng Pilipinas has unveiled a draft circular that would halt the acceptance of new applications from payment system operators for one year. During this suspension period, the central bank intends to conduct a thorough evaluation of its existing regulatory structure and licensing taxonomy. Critically, applications already submitted prior to the freeze would remain under review, though no formal approvals or rejections would be issued until the pause concludes. Companies would be prohibited from commencing regulated activities without explicit BSP authorization during this window.
The proposal extends regulatory oversight to payment arrangements connecting traditional financial institutions with virtual asset service providers. Institutions that provide merchant acquisition services would be required to work with licensed VASPs exclusively through direct merchant agreements rather than alternative arrangement structures. These relationships would face substantial compliance requirements designed to mitigate risk exposure.
Under the enhanced framework, financial institutions managing such arrangements must implement rigorous customer due diligence procedures alongside continuous transaction monitoring. The circular also establishes transaction and settlement limits tailored to the risk profile of each VASP relationship, with controls varying based on individual circumstances and regulatory determinations.
The definition of regulated VASPs encompasses firms requiring licensing, registration, or authorization from the BSP, the Philippine Securities and Exchange Commission, or other designated authorities. These entities are classified alongside other high-risk service categories including gaming operators and money service businesses, reflecting the regulatory concern surrounding the virtual asset sector.
If adopted, the circular would become effective 15 days following its official publication. The BSP is currently soliciting public feedback on the proposal before finalizing the measure.
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