Philippines’ Central Bank to License Crypto Trading and Custody Firms
These efforts have intensified since the coronavirus outbreak that speeds up the transition towards cryptocurrencies and digital payment methods. Also, the factors like deficits, debt, and fears of currency debasement play a significant role in this rising trend. China comes forward in developing its digital currency. It is believed that China will introduce its official cryptocurrency shortly.
Beyond Central Banks’ attitudes towards digital assets is the lack of regulation on cryptocurrencies as a central authority does not issue digital money. Thus, while digital payment methods enable customers to buy or sell much more comfortable, cheaper, and faster than traditional cash, that also complicates countries’ situation to track and trace the transactions and actors using cryptocurrencies. In this regard, the Philippines’ Central Bank, the Bangko Sentral ng Pilipinas (BSP), announced a new framework regulating the country’s cryptocurrency activity.
The Central Bank of the Philippines (BSP) decided to implement a broader licensing regime for digital asset firms in the country, in line with the emergence of cryptocurrency regulations launched in Southeast Asia. This new regulatory framework is said to be recommended by the Financial Action Task Force (FATF). According to the law, digital asset firms are required to have a license issued by the BSP. It has been reported that the expanded regulatory regime will also include cryptocurrency derivative platforms.
In this context, all cryptocurrency exchanges operating in the country will have to comply with global financial practices, including “Anti-Money Laundering and Countering the Financing of Terrorism.” Besides, cryptocurrency transfers above a specific limit will require credentials for both the receiving and sending parties. The BSP director Benjamin Diokno stated that an expanded regulatory regime was necessary. According to Diokno, the new rules will eliminate any regulatory gaps in the financial services ecosystem. The manager also added that the Central Bank is responsible for balancing between promoting financial innovation and maintaining monitoring responsibilities.
In addition to all these, it is known that BSP has started to work on the development of a central bank digital currency (CBDC) in 2020. However, it has been announced that the bank is not ready to issue its digital currency, but other ongoing developments worldwide are being followed. Southeast Asia continues to be a global hub for open finance, with a positive trend towards emerging technologies. Markets such as Singapore and Thailand are among the countries that are actively using the electronic payment ecosystem. According to studies conducted by digital research firms, crypto money activities in Asia are almost equal to half of global digital asset trading.
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