Back to Index of Cryptoasset Regulations

I. Approach to Assets Created Through Blockchain

A. Financial Regulation

Bangko Sentral ng Pilipinas (BSP, the Philippines Central Bank) has issued guidelines concerning virtual currencies (VCs).[1]  Specifically, the BSP Guidelines provide that because VCs are not backed by a central bank or a particular commodity and are not guaranteed by any country, they are not legal tender.[2]  However, because they are used as a conduit to provide certain financial services, such as remittances and payment transactions, entities that provide such services using VCs must register with the BSP and adopt adequate measures to mitigate and manage risks associated with such currencies.[3] VCs are defined by the BSP Guidelines as “any type of digital unit that is used as a medium of exchange or a form of digitally stored value created by agreement within the community of VC users.”[4]

B. Management of Technology Risk

The BSP Guidelines indicate that the following cybersecurity measures must be taken by virtual currency exchanges: 

Depending on the complexity of VC operations and business models adopted, a VC exchange shall put in place adequate risk management and security control mechanisms to address, manage and mitigate technology risks associated with VCs. For VC exchanges providing wallet services for holding, storing and transferring VCs, an effective cybersecurity program encompassing storage and transaction security requirements as well as sound key management practices must be established to ensure the integrity and security of VC transactions and wallets. For those with simple VC operations, installation of up-to-date anti-malware solutions, conduct of periodic back-ups and constant awareness of the emerging risks and other cyberattacks involving VCs may suffice.[5]

C. Anti-Money Laundering Law

The BSP Guidelines provide that virtual currency exchanges are considered similar to transfer and remittance exchanges and thus are covered by pertinent anti-money laundering (AML) legal and regulatory rules.[6] Accordingly, a Philippine AML regulation provides that, in order to mitigate and manage risks, entities that provide services with virtual assets must register with Philippine authorities, obtain from them appropriate licenses, and have systems aimed at “monitoring  and  ensuring  compliance with  the  relevant preventive measures.”[7]

D. Taxation

Legislation specifically addressing the taxation of virtual currencies could not be located.

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II. Regulation of Cryptocurrencies as Financial Securities

Detailed rules addressing the custodianship of cryptocurrencies by financial institutions could not be located. However, a Philippine AML regulation provides that “safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets” is an activity that may be performed by providers of services related to virtual assets.[8]

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III. Treatment of Cryptoassets Not Considered Securities

The Philippine Securities and Exchange Commission is developing rules pertaining to the registration of initial coin offerings,[9] which will include pertinent rules on the topic of the regulation of cryptocurrencies as financial securities.

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IV. Custodianship of Cryptocurrencies by Financial Institutions

As noted above, the BSP Guidelines indicate that entities that provide certain financial services using virtual currencies must register with the BSP and adopt adequate measures to mitigate and manage risks associated with such currencies.

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V. Distinctions in Treatment of Different Categories of Cryptocurrencies

The BSP Guidelines on virtual currencies provide that no particular cryptocurrency is to be endorsed by the Philippine Central Bank.[10]

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Prepared by Gustavo Guerra
Senior Foreign Law Specialist
April 2019

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Last Updated: 12/30/2020