September 26, 2019 – The Senate Bill 1041 by Senator Imee Marcos titled “An Act Recognizing Digital Assets, Requiring the Registration of Digital Asset Enterprises, Their Operators, and for Other Purposes,” also known as the “Digital Asset Act of 2019” aims to clarify and institutionalize the rules regarding digital assets, recognize but not regulate digital assets by defining what they are and standardizing the process for the licensing and operation of e-money, virtual asset exchanges, and virtual asset businesses.
Here are key takeaways from the bill. The full copy of which can be found at the end of the article. Note that the writer of this article is not a lawyer and this should not be seen as legal advice or investment advice but merely for information dissemination only.
Also note that this is a BILL, not a LAW
- BSP as Lead Agency for E-Money. By E-Money, the electronic representation of money that is also legal tender. For example, the Peso residing on your Coinsph account is defined by law as “E-Money.”
- The Digital Asset Act of 2019 wants the Bangko Sentral ng Pilipinas (BSP) to be in charge over the operation of E-Money. (At the moment, as far as this writer is aware, any operator which has e-wallets in their product i.e. holding a digital representation of the PESO is required to have an Electronic Money Issuer (EMI) License.)
- The BSP shall establish policies relating to the monitoring of E-Money and E-Money issuers, including the issuance of rules, determination of fees, considerations to address, etc.
- BSP shall be the ONLY entity that can issue E-money licenses. The licensee must also register with Anti-Money Laundering Council Secretariat within thirty days upon starting the business operations.
- SEC as Lead Agency for Virtual Assets. The bill defined Virtual Assets as virtual currencies and virtual tokens. It proposes the Securities and Exchange Commission (SEC) to be in charge over the offering and issuance of virtual assets, and the operation of virtual asset businesses.
- The SEC will have the duty and power to establish policies relating to virtual assets, including issuance or rules, determination of fees, permissions, etc. The SEC also has the duty to disclose information relating to any violation of any businesses or permissions who commit offense based on this act.
- Only the SEC can issue licenses to offer newly issues virtual tokens to the public. Also, only the SEC can issue a license to operate a virtual business.
- Virtual Asset Business Operators and Virtual Token Service Providers shall be regarded as financial institutions.
The bill aims to standardize who licenses what and to whom. This week, this bill is discussed by a Senate Hearing by the Committee on Banks, Financial Institutions, and Currency chaired by Senator Grace Poe. It was recommended that a task force be created to study this field before passing a law governing the subject matter. You can read more about it in these two articles:
- PH Senators Recommend SEC, BIR, BSP etc in Digital Asset/Cryptocurrency Task Force
- Senator Imee Marcos Proposes Bill to Clarify Digital Assets and Standardize Licensing of Virtual Currency Operations
You can also read the entire bill in this link.
This article is first published on BitPinas: [Key Takeaways] Senate Bill 1041- Digital Asset Act of 2019