Financial Crime World

Philippines Moves to Regulate Fintech Sector

The Philippine government is taking steps to promote innovation and stability in the financial technology (Fintech) sector by implementing stricter regulations on cryptocurrency trading and initial coin offerings (ICOs), as well as providing tax incentives for Fintech companies.

Growing Concerns Over Virtual Currency Trading

Growing concerns over the risks associated with virtual currency trading, particularly among investors who are not familiar with the market, have prompted the government to take action. According to a recent report by the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, there is a need to regulate crowdfunding initiatives and ensure that they are transparent and secure.

Proposed Regulations

Under the proposed regulations, cryptocurrency trading platforms will be required to obtain licenses from the Securities and Exchange Commission (SEC) before operating in the country. Additionally, ICOs will be subject to stricter requirements, including:

  • Submission of detailed information on the project’s goals, risks, and financial projections
  • Obtaining a license from the SEC

Tax Incentives for Fintech Companies

The government is also providing tax incentives for Fintech companies that operate in the country. These incentives include:

  • A reduced corporate income tax rate of 10% for the first five years
  • Exemptions from value-added taxes (VAT) and withholding taxes

“We want to encourage innovation and growth in the Fintech sector while ensuring that investors are protected,” said Finance Secretary Carlos Dominguez III. “By providing regulatory clarity and incentives, we hope to attract more investment and create jobs.”

Cybersecurity Plan

The Philippine government has also launched a cybersecurity plan aimed at protecting the country’s financial systems from cyber threats. The plan includes measures to:

  • Improve the security of financial institutions’ systems and networks
  • Enhance the skills of financial sector employees in cybersecurity

Regulatory Framework

Here are the key takeaways from the proposed regulatory framework:

  • Cryptocurrency trading platforms will be required to obtain licenses from the SEC before operating in the country.
  • ICOs will be subject to stricter requirements, including the submission of detailed information on the project’s goals, risks, and financial projections.
  • FinTech companies that operate in the country will be eligible for tax incentives, including a reduced corporate income tax rate of 10% for the first five years, as well as exemptions from VAT and withholding taxes.

Fintech Sector Expected to Grow

The Fintech sector is expected to continue growing in the Philippines, driven by increasing adoption of digital payments and mobile banking. According to a recent report by Statista, the Fintech market in the country is expected to reach $1.3 billion by 2025.

“We see great potential for growth in the Fintech sector,” said BSP Governor Nestor Espenilla. “By providing regulatory clarity and incentives, we hope to attract more investment and create jobs.”

Sources

  • Bangko Sentral ng Pilipinas (BSP)
  • Securities and Exchange Commission (SEC)
  • Philippine government
  • Statista