Approval from the Bangko Sentral ng Pilipinas (BSP) is required for financial firms that will be providing virtual exchange conversions via automated teller machines (ATMs) before offering the service to the public.
According to a recent report, Memorandum 2019-006 was issued by the central bank to remind banks that any plans to offer ATM conversions and withdrawals from cash to digital coins must be registered with the regulator.
The central bank came out with rules, in 2017, which require any firm that offers the exchange of money into virtual currencies (VC) and vice-versa to register with them.
The issuance, signed by BSP Deputy Governor Chuchi G. Fonacier, detailed, “In this regard, operators of ATMs that allow purchase of exchange of VCs (for example, bitcoin) or other devices with similar functionality and capability, are considered as VCE (virtual currency exchanges) and should register with the BSP pursuant to Circular No. 944.”
Cryptocurrencies like Bitcoin, Ethereum and Ripple are virtual currencies not regulated by any state or central bank.
These digital coins can also be used to pay for goods through the Internet and can be treated as an investment, given their fluctuating valuations.
A virtual currency, as reported, is any type of digital unit that is used as a medium of exchange or a form of digitally stored value created by agreement within a community of users.
As registered virtual currency exchanges, they should comply with anti-money laundering or terrorist financing laws and regulations.
They should also ensure that sufficient and appropriate controls and governance framework are adopted to manage the associated technology and other operational risks.
Lastly, they should put in place adequate consumer protection and customer support, among others.
So far, there are seven VCEs allowed to operate in the country by the Bangko Sentral ng Pilipinas.
Using virtual currency ATM
The central bank has warned the public to take caution in using privately-issued cryptocurrency for payments and investments given its “highly speculative and volatile” nature.
The Anti-Money Laundering Council has also said it is eyeing to cover digital currencies under its watch.
OpenGov Asia earlier reported on the first two-way virtual currency ATM launched in the Philippines by a major Philippine bank.
This will allow customers to purchase and sell virtual currencies for cash via an ATM machine as part of its sandbox.
According to the Chairman of the bank, they already have the ATM machine in the country, which they will place in their flagship branch located along Ayala Avenue in Makati.
Furthermore, the bank has tapped the services of a financial technology firm in order to operate the exchange. This firm is among the seven VCEs approved by the central bank.