This article had an update on May 22, 2019.
October 5, 2017: Many people around the world have already turned to bitcoin as an alternative to fiat money. Some countries like Japan have even deemed it proper to regulate bitcoin. This move lent legitimacy to BTC and other digital currencies as a whole.
Table of Contents.
- 1 Overview
- 2 Is Bitcoin Legal in the Philippines?
- 3 What is the impact of this and why is it important?
- 4 Does the Bangko Sentral ng Pilipinas endorses Bitcoin?
- 5 So is Bitcoin Legal in the Philippines?
With its popularity at an all-time high, bitcoin naturally earns the attention of the Bangko Sentral ng Pilipinas (BSP), the country’s currency, money supply, and interest rate manager.
The Central Bank of the Philippines recently mentioned how bitcoin, created by the anonymous Satoshi Nakamoto, is becoming popular in the Philippines. Then-BSP Deputy Governor Nestor A. Espenilla Jr. even said last January 2017 how Filipinos have started using bitcoin to send or receive remittances from the United States and elsewhere abroad.
Because of bitcoin’s popularity, the BSP and the Securities and Exchange Commission (SEC) has been working extra hard to remind and warn Filipinos initially through advisories and circulars regarding cryptocurrency’s volatility. These were created to protect the people against the interest of those who want to take advantage of the new technology.
The BSP has released Memorandum Circular No. 944 that serves as guidelines for virtual currency exchanges in the country.
In August 2018, SEC released draft rules on initial coin offering (ICOs). It was welcomed by the community as it will help regulate digital currencies. The corporate regulator is also set to release its draft rules on virtual currency exchange, in cooperation with the BSP, this September 2018. (Update: This is delayed).
Is Bitcoin Legal in the Philippines?
BTC exchange services are now registered with the Bangko Sentral ng Pilipinas. Coins.ph, for example, is registered as a Foreign Exchange Dealer (FXD), Money Changer (MC) & Remittance Agent (RA). Furthermore, other businesses who want to engage in Bitcoin transfer needs to get registered with the BSP. If not, no banks will deal with them.
As of this update (May 22, 2019), the BSP awarded 10 virtual currency exchange licenses. The licensee will have the ability to convert Philippine Peso to cryptocurrency and vice versa. These are Betur, Inc. (known as Coins.ph) that received its license on September 2017; Rebbitance, Inc. (a wholly owned subsidiary of SCI Ventures) on October 2017; BloomSolutions on May 2018; ETranss and Virtual Currency Philippines, Inc both on July 2018. PDAX receives its license in September 2018. New licensees include Bexpress and Coinvil.
What is the impact of this and why is it important?
The BSP wants to manage the risks involved with cryptocurrencies.
This is to prevent some people to inject dirty money into the country through bitcoins that will get converted to pesos. This is why the Anti-Money Laundering Council (AMLC) has its eyes on cryptocurrencies along with casinos to enforce a strict watch on dirty money.
According to Mr. Mel George Racela, Secretariat Executive Director of AMLC, it is too early to say whether these cryptocurrencies are also the playground of money launderers. This is why the BSP is trying its best to regulate it by requiring the virtual currency license holders to submit customer data and transaction reports to the AMLC.
Stricter KYC (Know Your Customer)
Bitcoin companies will have stricter KYC (Know Your Customer). This means they will know who you are. (This is the reason why we did not put anonymity as an advantage of bitcoin in the Philippines).
- Read more: KYC for Bitcoin in the Philippines
This registration allows bitcoin companies to deal with banks. In addition to the costs needed to establish a business, buying bitcoin in the Philippines means the user pays in peso to receive bitcoin. Coins.ph allows you to fund your bitcoin wallet directly from your bank. The same is true with the other websites.
Does the Bangko Sentral ng Pilipinas endorses Bitcoin?
The BSP made it clear that it’s not endorsing bitcoins or any other digital currencies. It is not legal tender. This is because it is not backed up by any commodity, of financial institutions, or monitored by a central bank. Here’s a quote from the Circular they published early in 2017:
The Bangko Sentral does not intend to endorse any VC, such as bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.
What is BSP’s Circular No. 944?
This circular details the guidelines the BSP had set up for businesses engaged in Virtual Currency (such as bitcoins) in the Philippines.
What is included in the Circular No. 944 by the BSP?
- Requirements for the Issuance of a Certificate of Registration
- Details how a VC exchange can obtain a certificate of registration
- Registration and Annual Service Fees
- Details the payments the VC exchange has to do
- Transactional Requirements for VC Exchanges
- Technology Risk Management
- Details the technologies VCs must put in place to protect its business and its customers.
- Internal Control
- Details what the Exchange should do to make sure it follows the BSP Guidelines.
- Notification and Reporting Requirements
- Details what and when will the Exchange report to the BSP.
Additionally, the circular also detailed the penalties for every violation that they might commit.
Read More: Check out the BSP’s Circular No. 944 here that discusses virtual currencies such as Bitcoin.
So is Bitcoin Legal in the Philippines?
Technically, bitcoin is not illegal but also not “legal”. If anything, the BSP ruling is a step that allows everyone to engage in bitcoin without fear of being classified as someone who doesn’t use traditional currency (AKA the Peso). It is a step towards acceptance. Also, it is a way of telling us that we can deal with bitcoins if we want.
So if a business wants to accept bitcoins as a payment method or integrate it to their payment system, the business is free to do so. If you are a freelancer and you want to receive payment in bitcoins, you are free to do so too. Again, it is important to note that the BSP does not endorse virtual currencies for reasons already stated above. However, those who wish can engage with bitcoins. Consequently, for bitcoin exchange services, you must register first and follow the guidelines set up by the BSP. Keep in mind that the country’s revenue service agency (the BIR) has not yet issued any news or guidelines regarding cryptocurrencies.
Do you actively engage in bitcoin transactions? Do you know that Bitcoin is Legal in the Philippines? What do you think the government can do to promote virtual currencies? Or do you think the government must or must not promote cryptocurrencies? Let us know in the comments below!