Bangko Sentral ng Pilipinas (BSP), the central bank of Philippines, has issued pioneer regulatory framework for digital currency exchanges and similar entities that are operating in the country.

The approval of regulatory framework by the Monetary Board (MB) comes as a move to provide an environment that fosters financial innovation as well as making sure that the Philippines shall not be used for money laundering or terrorist financing activities. The approval also comes as a result of ensuring that the financial system and financial consumers are adequately protected.

The new digital currency exchange regulation aims to balance the interests of encouraging technological innovations with that of the potential to improve the level of inclusion and efficiency in the financial system. The regulation seeks to address emerging risks to the system that arises out of these new technologies. The regulation does not cover VC creators and solely focuses on entities facilitating the conversion or exchange of any VC into fiat currency or vice versa.

"The Bangko Sentral does not intend to endorse any [virtual currency], 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 [virtual currencies] when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability,” according to the BSP guidelines.

The release stated that the MB has decided to proceed forward with adopting a formal regulatory framework in recognition of the rapid growth of VC-based payments and remittance transactions that are estimated at around USD 5 to 6 million per month for certain major players.