BSP Closely Monitors Local Axie Infinity SLP Merchants System

By Shiela Bertillo

The Bangko Sentral ng Pilipinas (BSP) is closely monitoring Axie Infinity in regards to how players and merchants are using and exchanging the cryptocurrency Smooth Love Potion (SLP) as a form of payment and the extent of the number of merchants accepting it as mode of payment. In a statement, the central bank is looking into Axie Infinity’s possible classification as an operator of payment system (OPS), and if it is, Axie Infinity or Sky Mavis, the developers of the game, should register as one.

Is Axie Infinity a VASP?

According to the central bank, Axie Infinity owned by Vietnam-based Sky Mavis, “is not considered as VASP” or virtual asset service provider.

The BSP Circular No. 1108 or the Guidelines for VASPs issued in January this year, recognizes the evolving virtual asset systems or markets, and the risks associated with it because of its underlying features — anonymity, volatility of prices and “velocity” of transactions. BSP considers VASPs as money service businesses, when fiat money is converted into virtual assets, and are still transferable and be used for payment. (Read more: Cryptocurrency Tax Philippines | Play-to-Earn | Axie Infinity Tax 101 by PDAX and Taxumo)

Consequently, the BSP said Axie Infinity is not a VASP because the scope of BSP Circular No. 1108 “excludes digital units of exchange used as in-game tokens, such as the implementation of SLP within Axie Infinity.” (Read More: Are NFTs and Gaming Tokens Subject to Same Rules as All of Crypto in the Philippines?)

“However, we’re also actively monitoring the level of merchant acceptance of SLP as a form of payment for goods/services, which may fall within the activities of an OPS,” BSP stated. (Editor’s emphasis: Note that the BSP is pertaining to Sky Mavis and not to the merchants.)

Axie’s SLP is an uncapped token earned as rewards by Axie Infinity players through battle or adventure mode. The token is also needed to breed Axies, the game’s Non-fungible Token (NFT), and a major avenue to earn actual money from playing the game. The SLP can be exchanged to fiat through local exchanges and through peer-to-peer. (Read More: How to Trade SLP, AXS, ETH to PHP Instantly Through BloomX)

An OPS are entities that provide cash-in service, bills payment service, and other conveniences such as a payment gateway, platform provider, payment facilitator, and merchant acquirer that allows merchants to accept payments, in cash or digital form.

According to Manila Bulletin’s report on their email interview with the BSP, the central bank said that once it concluded that the players of Axie Infinity are using and exchanging SLP as a form of payment, it will require Vietnam-based Sky Mavis, it’s owner, or its local partner, to register with the BSP as an OPS under the Circular No. 1049 which provides the rules for the registration of OPS. Otherwise, the game should stop operating in the country.

Last month, the BSP suspended Lyka, a popular social media platform, as well as its local partner Digital Spring, on the grounds of unauthorized operation as a payment system. (Read More: BSP Orders Lyka to Stop Operating, Invites Registration)

Lyka allows its users to purchase, exchange, and use Gift cards in Electronic Mode or GEMs as payment for goods and services.

However, in an earlier opinion article, Luis Buenaventura II, crypto entrepreneur, author, and NFT Artist, stated that Axie Infinity may not be  an OPS. He explained that because Sky Mavis does not actively solicit and instead focuses on encouraging people to play the game, then they are not an OPS. “Sky Mavis only wants people to play its game, and it’s the gamers themselves that are soliciting other gamers. This is a critical distinction that puts it outside of the BSP jurisdiction, because the game platform itself doesn’t engage in the conversion of peso to crypto, and only accepts payments within its own ecosystem.”

This article is published on BitPinas: BSP Closely Monitors Local Axie Infinity SLP Merchants System