The Central Bank of the Philippines officially recognizes Bitcoin as a legal payment system, becoming the first country to grant Bitcoin "financial status"

Bitcoin is making exciting progress in the Philippines. Most people are realizing how Bitcoin can positively impact the local economy. The Bangko Sentral ( Bangko Sentral ) has issued a guideline for virtual currency exchanges. Under this scheme, the Philippines officially recognizes Bitcoin as a payment system . It looks like the Philippines is the first country to give Bitcoin an official "financial status" .

The document, drafted by the Central Bank of the Philippines, contains some very interesting concepts. First and foremost, the country's central bank wants to ensure that there are no money laundering and terrorist financing projects in the country. This is not surprising, as no country wants to be associated with such illegal activities. However, unlike some other countries, the Philippines believes that Bitcoin has the potential to do a lot of good, rather than facilitate these criminal activities.

In fact, the Philippine central bank also stated how they believe that virtual currencies have the potential to revolutionize the delivery of financial services. In addition to this, the central bank also mentioned the financial inclusion that Bitcoin provides, which traditional financial solutions fail to provide . Although the Philippine central bank acknowledged that there are some risks associated with cryptocurrencies, they believe that the overall situation looks quite positive.

Philippines central bank sees merit in Bitcoin

One thing to keep in mind is that the Bangko Sentral ng Pilipinas does not currently recognize Bitcoin as a currency, as it is not issued by the central bank. The central bank does want to regulate virtual currency activities in the financial services industry. Major payment services and remittance solutions are in their sights. It seems clear that the Philippines will introduce new regulations to strengthen anti-money laundering (AML) and CFT regulations, which is a positive development. This will bring Bitcoin and other cryptocurrencies one step closer to legal tender by bringing virtual currencies under existing regulations.

As one would expect, virtual currency exchanges in the Philippines will need to obtain a certificate of registration. They will also be required to pay a registration fee and an annual service fee, the same as other financial service providers in the Philippines. Expenses over PHP500,000 (about $10,000) will only be payable by check or direct credit to a deposit account.

From an all-around perspective, the BSP’s proposal is quite reasonable. Any company that violates these terms will be subject to possible sanctions.

The development of Bitcoin in the Philippines looks quite positive. The central bank’s document acknowledges the possibilities that Bitcoin brings to the country. In addition, the country has no plans to create a separate licensing requirement for Bitcoin, which is good. The new plan is expected to take effect on February 21, 2017. It will be interesting to see what legal effects this will have on the use of Bitcoin in the Philippines.