With the hype of bitcoin in the Philippines also comes the curiosity of many whether the trade of this virtual currency is not against the law, thus the question, “Is bitcoin legal in the Philippines?”.
Earlier this year, Japan has regulated bitcoin. This came after the long debate which started in the wake of collapse of Mt.Gox, the now-defunct bitcoin exchange based in Shibuya, Tokyo, Japan that closed its operation after months of growing issues and declaration of insolvency and alleged stolen bitcoins.
In the US, the Financial Crimes Enforcement Network (FinCEN), an agency within the US Treasury Department, took the initiative. It published guidelines regarding the use of virtual currencies. FinCEN’s guidance dated March 18, 2013 defined the circumstances under which virtual currency users are categorized as money services businesses (also commonly known as money transmitting businesses or MTBs). MTBs must enforce Anti-Money Laundering (AML) and Know Your Client (KYC) measures to identify the people that they’re doing business with (coindesk.com).
In the Philippines, the Bangko Sentral ng Pilipinas has issued Circular No. 944 Series of 2017 that covers the guidelines for virtual currency (VC) exchanges operating in the country including bitcoin.
The above-cited circular recognizes bitcoin as a financial innovation and its potential to revolutionize delivery of financial services, particularly for payments and remittance. Transactions with bitcoin has the ability to provide faster and more economical transfer of funds, both domestic and international, and may further support financial inclusion, and while at the same time ensure that the Philippines shall not be used for money laundering (ML) or terrorist financing (TF) activities. Furthermore it is seen to ensure that financial system and financial consumers are adequately protected (Section 1 Circular No. 944 Series of 2017).
The BSP circular however clarifies that the Bangko Sentral does not intend to endorse any VC, such as bitcoin, as a currency since it is neither issued nor guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.
As per news reports, BSP Governor Nestor Espenilla, Jr. suggested they “have an open-minded approach to fintech (financial technology). This means that we take a very active role in ensuring that our policies provide opportunities for innovation.”
“Today, there are two virtual currency exchangers registered with the BSP and several more are under evaluation,” the central banker emphasized.
Given the continues growth of bitcoin in the Philippines, there is a great possibility that the law will be subject to several amendments. The government is putting into paramount consideration the adequate protection to country’s financial system and that financial consumers are given ample safeguards.
Regulators are taking further steps that could expand the use of virtual currencies, with the Securities and Exchange Commission (SEC), considering permitting the use in raising capital and the Bangko Sentral ng Pilipinas (BSP) looking to allow more exchanges to operate in the country. “The direction is for us to consider this so-called virtual currencies offerings as possible securities in which case we will apply the Securities Regulation Code,” SEC Commissioner Emilio Aquino said in a news conference (manilatimes.net).
It can be confidently said that bitcoin trade is legally permissible in the Philippines. Nevertheless, individual bitcoin traders are advised to examine wisely the platform they’re using, and employ the necessary precautions found therein, such as verification methods. It is also intelligent to check whether the company or individual running the platform has complied with the necessary registration as required by law.
Let us know in the comment section if you have any question or clarification with regard to the legality of bitcoin in the Philippines.