The Bangko Sentral ng Pilipinas (BSP) is looking to adopting blockchain solutions to some of its programs in the exercise of its regulatory authority over virtual asset service providers (VASPs) and virtual currency exchanges (VCEs), officials said.
Melchor Plabasan, director of the Technology Risk and Innovation Supervision Department of the BSP, told the Senate committee on banks, financial institutions, and currencies in a recent hearing that the central bank are implementing reforms to allow it address challenges to the applicability of the existing regulations to evolving digital products and services like NFTs and other virtual assets.
“You mentioned about the use of technology, so we are also in the process of automating a lot of processes in the BSP. Even with respect to how we do supervision and surveillance. We are now in the process of acquiring solutions. In terms of let’s say, we have one on cybersecurity. We are also planning to acquire a blockchain analytics solution to strengthen our surveillance over VASPs,” Plabasan told the panel chaired by Sen. Mark Villar.
He clarified the BSP, which estimates that there close to 20,000 cryptocurrencies, does not regulate virtual assets per se but VASPs
He said the BSP in 2021 expanded its scope of regulation and supervision under Circular 1108 to include other activities which are “incidental or crucial” in the performance of exchange between fiat and virtual assets.
“So that includes now even exchange between VAs or transfer of VAs and even safekeeping or custodian,” Plabasan said.
The BSP, he said, has a very stringent licensing process for entities wanting to engage in money service business in the country that includes a detailed evaluation of the applicant’s systems as well as a “walkthrough” to assess security infrastructure, consumer protection mechanism, cybersecurity, anti-money laundering program, and others.
He said the Financial Action Task Force, the global anti-money laundering watchdog, is issuing a new set of standards for VASPs and VCEs and the BSP is studying their implications on existing regulation.