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Philippines Takes a Stand Against Cryptocurrency Laundering: New Regulations Emerge to Protect Investors and Fight Financial Crimes
The Philippines, a country known for its tech-savvy population and growing internet penetration, has become a hotbed for cryptocurrency adoption. In recent years, the use of digital currencies has surged, with Filipinos using them for remittances, investments, and online transactions. However, this growth has also raised concerns about money laundering and terrorist financing.
Addressing Concerns
To address these concerns, the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, issued Circular No. 944 in 2017, acknowledging virtual currencies as a valid payment method. The circular mandated virtual currency exchanges to register with the BSP and adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
Comprehensive Regulatory Framework
In 2021, the BSP introduced the Guidelines for Virtual Asset Service Providers (VASPs), establishing a comprehensive regulatory framework for virtual currency exchanges in the Philippines. VASPs must obtain a license from the BSP before commencing operations and implement effective Know Your Customer (KYC) and AML/CTF measures to detect and report suspicious activities.
Registered VASPs
As of January 31, 2023, there are 19 registered VASPs in the country, providing various services such as trading, remittance, and asset management. The Securities and Exchange Commission (SEC), another key government agency, has also taken steps to regulate the cryptocurrency market.
SEC Regulations
In 2018, the SEC issued an advisory on initial coin offerings (ICOs) and cryptocurrency investments, warning investors about the risks involved and mandating that companies conducting ICOs register with the SEC and adhere to securities regulations. In December 2022, the SEC cautioned the public against using unregistered exchanges within the country, highlighting the importance of utilizing regulated exchanges for cryptocurrency transactions.
Capital Gains Tax
The Philippine government has also implemented a capital gains tax of up to 15 percent on cryptocurrency transactions, aiming to regulate and tax the growing digital asset market. The new regulations require Filipino citizens who own or trade cryptocurrencies to report their capital gains during their annual tax filings.
Expert Insights
Despite concerns about implementing new taxes on crypto by 2024, experts say that these measures are designed to bring more transparency to the market and protect investors from potential fraud and market manipulation.
Benefits of Regulations
The benefits of cryptocurrency regulations in the Philippines include:
- Promoting transparency
- Protecting consumers
- Preventing illicit activities such as money laundering and terrorist financing
- Establishing a safe and secure environment for users and businesses
With a proactive approach to regulation, the country is establishing itself as a leader in the global digital currency landscape, providing a safe and secure environment for users and businesses.