By working with experts, obtaining a Philippines crypto license for virtual asset service providers (VASPs) is greatly simplified. When the Certificate of Registration for Virtual Currency Exchange Services was introduced in 2017, the Philippines set a precedent in regulating virtual assets. In 2021, the Central Bank of the Philippines (Bangko Sentral ng Pilipinas, BSP) improved its approaches to regulation and licensing. This broadens the scope of the policy, as these changes are in line with the anti-money laundering standards of the Financial Action Task Force on Money Laundering (FATF).
Benefits of Acquiring a Philippines Crypto License
- Positioned in a rapidly evolving FinTech-friendly jurisdiction.
- Elevates credibility as a regulated cryptocurrency entity.
- Opportunity to become an Electronic Money Issuer, offering clients fiat accounts and payment cards.
- A robust regulatory framework with one of Asia’s largest counts of Philippines cryptocurrency license holders.
Regulatory Framework
The BSP’s role in monetary policy and crypto regulation
By officially recognizing virtual currencies through Circular 944 in 2017, the Bangko Sentral ng Pilipinas (BSP) plays an important role in regulating monetary policy. As such, virtual currency exchanges are required to register and comply with anti-money laundering and counter-terrorist financing requirements as mandated by the Circular.
In 2021, a detailed regulatory framework was established as the BSP published guidelines for Virtual Asset Service Providers (VASPs). In addition, it includes obtaining a cryptocurrency license Philippines from the BSP and implementing strict KYC and anti-money laundering and anti-terrorist financing measures.
Registered VASPs and services
ABA Global Philippines, Inc. (COEX STAR), Bloomsolutions, Inc., the Philippine Digital Asset Exchange (PDAX), and a total of 19 VASPs were registered in the Philippines as of the first quarter of 2023. The above organizations provide various services to cryptocurrency users, from trading and money transfers to asset management.
SEC regulatory body for cryptocurrencies
The Securities and Exchange Commission (SEC) regulates the country’s securities, investments, and financial instruments. In 2018, it required ICOs to register and comply with securities laws by issuing an alert on initial coin offerings (ICOs).
In addition, at the end of December 2022, the SEC emphasized the importance of regulated platforms for secure cryptocurrency transactions, warning the public about the risks of using unregistered exchanges.
On January 25, 2023, the regulation of cryptocurrencies and digital financial products was strengthened as the SEC presented draft rules. Among them is the expansion of enforcement powers, market surveillance, and the inclusion of “tokenized securities” and other blockchain-based financial products in its scope of competence.
Activities that Require a Philippines Crypto License
VASPs in the Philippines must engage in activities such as:
- Exchanging virtual assets (VAs) with fiat currencies.
- Trading between different VAs.
- Transferring VAs.
- Managing or safeguarding VAs (referred to as VA Custodians, similar to cryptocurrency wallet services in other countries).
Until May 12, 2021, entities that were previously registered under the old rules of virtual currency exchange, as well as new applicants, must obtain a new VASP license to conduct legal activities. They must comply with all the rules to avoid sanctions. To start working in any of these areas, obtaining a Philippines crypto exchange license is a necessary process.
Crypto Exchange License of the Philippines and Switzerland
In order to become a holder of a cryptocurrency license in Philippines, you need to follow the BSP’s recommendations regarding risk management and fulfill financial conditions, namely, be prepared for the initial registration fee and annual fees. In addition, you should keep in mind the minimum capital requirement, which may vary. Crypto companies are required to independently verify clients and comply with strict cybersecurity measures, and so on.
When considering such a prestigious jurisdiction as Switzerland, you must set up a local company, prepare a detailed business plan, and start-up capital. Equally important is effective risk management, organization of a structure with an anti-money laundering officer and a Swiss resident director. Compliance with internal and audit controls are key factors, as is compliance with Swiss law and cooperation with FINMA.
Requirements
Compliance and certification
- Obtaining a Money Service Business (MSB) Registration Certificate.
- Compliance with BSP regulations on outsourcing, risk management, IT security, anti-money laundering and consumer protection.
Financial requirements
- Initial registration fee — PHP 100,000 (~USD 2,100).
- Annual maintenance fee — PHP 300,000 (~USD 6,300).
- The minimum capital for VA custodians — 50 million. PHP (~1.05 million USD), and other firms — 10 million PHP (~210,000 USD).
Reporting and control
- Implement appropriate internal controls.
- Ensure compliance with legislation and qualified management of key functions.
- Annual and quarterly financial and transaction reports are mandatory.
Due diligence and transaction monitoring
Conducting customer due diligence with special attention to transactions exceeding PHP 5,000 (~USD 105) or that are suspicious.
Protocols for high-value transactions
Detailed information of both parties must be accurately recorded and reported for transactions over PHP 50,000 (~US$1050).
Consumer protection and data security
- Provide clear information about usage, risks, and fees.
- Establish mechanisms for complaints and dispute resolution.
- Maintain strict cybersecurity practices for wallet services.
Operational integrity
- Carefully select licensed VASPs and accredited virtual assets.
- Ensure the liquidity of fiat transactions and keep separate records of client and own virtual assets.
- Compliance with regulatory standards for outsourcing services.
- Diligently manage outsourcing risks and take responsibility for compliance with all regulatory requirements.
Guide to Obtaining a Philippines Crypto License
Obtaining a crypto exchange license Philippines involves a systematic three-stage process, each with its own set of requirements and procedures:
Step 1 — BSP Approval
Get approval to function as a Money Service Business (MSB).
- Application letter and Articles of Incorporation.
- Detailed business plan covering purpose, structure, services, capital, market, workflow, fees, and IT setup.
- Owner and officer details, financial proof, Anti-Money Laundering Council registration, and a PHP 1,000 filing fee.
- Provisional assessment and a presentation, processed in 20 working days.
Step 2 — SEC Registration
Acquire a Letter of No Objection for MSB registration from the SEC.
- Notification to proceed, application letter with BSP reference, and MSB compliance proof.
- Timeline: Reviewed within 7 working days.
Step 3 — Certificate of Authority
Finalize MSB operation authorization.
- Notarized application, incorporation documents, municipal business license, AML-CFT training proof, and registration fee.
- Final approval takes approximately 13 working days.
Taxation of Cryptocurrencies in the Philippines
The Philippine government has introduced a capital gains tax of up to 15% on cryptocurrency transactions. Profits from sales, exchanges, and purchases made with digital currencies are subject to taxation. The main aspects also include:
- The obligation to declare capital gains during the annual tax return filing as a Philippine individual engaged in cryptocurrency trading.
- Working to increase market transparency, ensure proper tax reporting and investor protection, and increase government revenue.
FAQ
What steps are involved in acquiring a crypto license in the Philippines?
To acquire a cryptocurrency license Philippines, applicants must complete a three-stage process:
- First, obtain BSP approval as a Money Service Business (MSB);
- Second, secure a Letter of No Objection from the SEC for the Articles of Incorporation;
- Third, receive a Certificate of Authority to operate as an MSB.
What do I need for the initial crypto license application?
The initial application requires a signed application letter, Articles of Incorporation, a detailed business plan, owner and personnel details, financial standing proof, AML Council registration, and a filing fee.
How long does the crypto license application take?
The BSP approval process takes about 20 working days, the SEC’s Letter of No Objection review is around seven working days, and issuing the Certificate of Authority takes another 13 working days after document submission.
What financial commitments are involved in applying for a crypto license?
Applicants face a PHP 1,000 (~USD 21) filing fee, with VA custodians required to have a minimum capital of PHP 50 million (~USD 1.05 million) and other firms PHP 10 million (~USD 210,000), plus annual fees and compliance costs.
