Two companies operating out of the Philippines have just been given the approval to operate Bitcoin exchanges by the Bangko Sentral ng Pilipinas (BSP). The acceptance of two bitcoin exchanges comes only months after BSP recognized two bitcoin companies experiencing $5-6 million a month in volume, compared to just half that in 2016.
It was only February 2017 when the BSP issued Circular 944, which laid down the necessary framework for a monumental decision like this to occur in the first place.
The circular states that Bitcoin exchanges act similarly to remittance and transfer companies, they should also be regulated by Republic Act 9160 or the Anti-Money Laundering Act of 2001.
Remittances from oversea workers back home to family in the Philippines is so routine that quite a large portion of the country’s GDP relies on remittances. Sending money over great distances is something that bitcoin excels at, hence the rising popularity in Bitcoin remittance companies.
While naturally, the companies handling the remittance would convert the bitcoin to the Philippine peso, there may be some families looking to forgo a company and transmit bitcoin themselves.
Following this reasoning, it makes sense that exchanges where bitcoin and fiat can be swapped freely, hence the approval of two exchanges.
The news was broken at the recent FinTech Thought Leadership Roundtable Series by Governor Nestor Espenilla Jr, where he described the exchanges as being “local based, but they have international roots.”
So while the Bitcoin companies are springing up, the BSP wants to set a legal precedent down and get ahead of the ball.
On top of circular 944, Espenilla said the BSP is also going to issue IT risk management framework to supplement the basic framework established in Circular 808, originally issued in 2013.
Governor Nestor Espenilla Jr also stated:
“It will have enhanced expectations on cybersecurity risk management, that is one. It will further open up the use cases for cloud technology in banking applications, and the third one it if further strengthen the governance responsibilities of the bank’s boards and management to make sure that the IT systems of their institutions are robust and resilient to cyber crime as well as disasters.”
With Bitcoin becoming more and more prevalent at an accelerating pace, governments are having to adapt to keep up with the revolutionary concept of Bitcoin and many of its counterparts such as Ethereum, Litecoin, and Monero to name a few.
A framework like this may invite further Bitcoin companies to settle in the Philippines, potentially bringing more money into the country.