Who Should Regulate VASPs in the Philippines?
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Opinion: Convenor of Policy Think Trunks BayWatch and BitPinas contributor Rafael Padilla comments on the recent reports of the Philippine regulators being urged to ban global exchange Binance in the country by a policy think tank.
I’m Rafael Padilla, Convenor of BayWatch, a policy think trunks focused on crypto-related policy issues and exotic beaches. We write below our position on the Binance controversy.
Whether Binance is operating legally or illegally in the Philippines does not hinge solely on whether Binance has a license from the BSP. The issue requires a reflection on whether the licensing of virtual asset service providers (VASPs) falls within the regulatory perimeter of the BSP in the first place. This goes beyond BSP Circular 1108 (Guidance for VASPs), and requires a reading of the BSP Charter itself.
It’s interesting that when the BSP Charter was amended in 2019, the law explicitly clarified BSP’s regulatory oversight on payment system operators and money service business (MSB), but did not mention anything about “virtual currency exchanges” or “virtual asset service providers.”
Per BSP Circular 1108, BSP interprets VASPs as MSBs, which seems to be a sweeping policy considering the five categories of VASPs – some of them even fall within the scope of securities regulation.
BSP even defined in Circular 1108 what “money service business” means, but the same definition if you carefully read it does not actually fit some categories of VASPs.
Best examples are crypto-to-crypto trading platforms and custodial crypto wallets. How are they considered “money service business” both according to BSP’s technical definition of “MSB” and even in the common sense of the term? How is it considered money service business when the currency regulator itself would even strongly argue that “crypto is NOT money?”
I think there’s a regulatory gap on who should regulate certain VASPs because some categories neither fall within BSP nor SEC’s regulatory ambit. This gap can’t be simply filled by administrative rules and requires statutory clarity from Congress. In other words, there needs to be a law, an act of Congress, to fill in the regulatory gap concerning VASPs.
Until then, are we sure that we can say that Binance is operating illegally in the Philippines?
This opinion article is published on BitPinas: Who Should Regulate VASPs in the Philippines?
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