The central bank of the Philippines moves to regulate bitcoin exchanges

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, said on Wednesday it will start regulating operators of virtual currencies to protect financial consumers and rein in risks like money laundering and terrorism financing.

The move comes months after officials for the Bangko Sentral ng Pilipinas signaled their intention to regulate exchanges, suggesting at the time that they would class the businesses as a form of remittance company.

“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 material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability,” the bank said.

Users of digital currency bitcoin more than doubled in the Philippines in the first half of 2015 from a year earlier, according to the central bank, while virtual currency transactions range from $5 million to $6 million per month for certain major players.

Requirements for remittance companies such as registration, minimum capital, internal controls, regulatory reports and compliance with anti-money laundering laws will be applied to virtual currency exchanges since they are similarly treated as companies offering money or value transfer services.

The rules will also require virtual currency exchanges to execute a “deed of undertaking” to implement minimum standards of consumer protection.

Failure to comply with that could result in the cancellation of the operators’ certificate of registration, which would bar them from dealing with banks, the central bank said.