BSP Cautions the Public Against Engaging with Unregistered and Foreign Virtual Asset Service Providers (VASPs)

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In a press release, the Bangko Sentral ng Pilipinas (BSP) issued an advisory that “strongly urges” the public not to deal with Virtual Asset Service Providers (VASPs) that are unregistered with the central bank or domiciled abroad. 

The BSP, aside from pointing out the inherent risk of price volatility associated with Virtual Assets (VAs), it  further noted that “VASPs that are based abroad may present additional challenge on enforcing legal recourse and consumer protection and redress mechanisms for local customers, among others.”

Virtual Asset Service Providers (VASP) are those that facilitate exchange between virtual asset and fiat currencies, virtual asset to virtual asset, custody or transfer of virtual assets. 

A week prior to this announcement, the central bank declared that it will no longer approve any new VASP applications in the next three years beginning September 1, 2022. This was according to a memorandum signed by  Deputy Governor Chuchi Fonacier which stated that this is being implemented to review the current local virtual asset market in the Philippines. (Read more: BSP Imposes Ban on VASP License Application)

“The Bangko Sentral further emphasizes that VA dealings are generally considered as high risk activities which may result in huge financial losses due to price swings. Further, both the government and registered VASPs do not, in any way, guarantee protection against financial losses stemming from VA price fluctuations,” the BSP wrote.

The central bank also stressed that their recent data also emphasized that frauds and scams have consistently contributed to a large portion of VA-based crimes.

“Thus, the public should exercise caution, conduct their own due diligence, and always be mindful of the risks prior to engaging with VA-related activities,” they stated.

Recently, one of the most talked about entities in the fintech industry was the involvement of cryptocurrency exchange Binance with the Philippine regulators and the many calls by Infrawatch for it to be banned as well as its journey of acquiring licenses in the country—including a VASP license. (Read more: [Exclusive Interview] Binance APAC Reveals Plans in the Philippines, Says Acquiring VASP License is a Priority)

Full Statement from the Central Bank:

The Bangko Sentral ng Pilipinas (Bangko Sentral) strongly urges the public not to deal with Virtual Asset Service Providers (VASPs) that are either unregistered or domiciled abroad.

On top of the inherent risk of price volatility associated with Virtual Assets (VAs), VASPs that are based abroad may present additional challenge on enforcing legal recourse and consumer protection and redress mechanisms for local customers, among others.

The Bangko Sentral further emphasizes that VA dealings are generally considered as high risk activities which may result in huge financial losses due to price swings.

Further, both the government and registered VASPs do not, in any way, guarantee protection against financial losses stemming from VA price fluctuations. Recent data likewise suggests that frauds and scams have consistently contributed to a large portion of VA-based crimes.

Thus, the public should exercise caution, conduct their own due diligence, and always be mindful of the risks prior to engaging with VA-related activities.

To verify whether a VASP is supervised and regulated by the Bangko Sentral, the public may verify from the list of BSP-registered VASPs which can be found through this link: https://www.bsp.gov.ph/Lists/Directories/Attachments/19/VASP.pdf

For more information, please refer to the following Frequently Asked Questions (FAQs):

1.    FAQ on VAs and VASPs:

https://www.bsp.gov.ph/Media_and_Research/Primers%20Faqs/VC.pdf

https://www.bsp.gov.ph/Media_and_Research/Primers%20Faqs/FAQs_VASP.pdf

2.    FAQ on Non-fungible tokens (NFTs):

https://www.bsp.gov.ph/Media_and_Research/Primers%20Faqs/FAQs_on_NFTs.pdf​

The public is encouraged to immediately report unlawful activities facilitated through VAs and/or VASPs to: 

CONSUMER PROTECTION AND MARKET CONDUCT OFFICE

Bangko Sentral ng Pilipinas

Mabini St., Malate, Manila 1004

Email: consumeraffairs@bsp.gov.ph

Tel. No.: (+632) 8708-7087

Trunkline: (02) 8811-1277​ local 2584​

This is a developing story.

This article is published on BitPinas: BSP Cautions the Public Against Engaging with Unregistered and Foreign Virtual Asset Service Providers (VASPs)

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