Philippine Central Bank Proposes 12-Month Freeze on New Payment Institution Registrations
The Bangko Sentral ng Pilipinas (BSP) has recently proposed a 12-month freeze on the registration applications for new payment system operators (OPS), while tightening the review requirements for virtual asset service providers (VASP).
According to the draft consultation released by the BSP, new OPS registration applications submitted during the freeze will be suspended; however, applications submitted before the freeze will continue to be evaluated, but no approvals or rejections will be issued until after the freeze ends. Entities not authorized by the BSP are prohibited from conducting business activities that require OPS registration.
The BSP also requires regulated entities to only conduct business with regulated VASPs through a "direct merchant cooperation" model, and to fulfill stricter due diligence and ongoing monitoring obligations, setting limits on related transactions and settlements, and implementing risk-based tiered control measures. This requirement covers all VASPs licensed, registered, or authorized by the BSP, the Philippine Securities and Exchange Commission (SEC), or other regulatory bodies.
The proposal also includes the establishment of a national unified "QR code merchant database," requiring direct identification of merchants to reduce payment traceability gaps, and imposing stricter controls on intermediary institutions involved in payment arrangements. The draft mandates financial institutions to report incidents of fraud, scams, and data breaches within 24 hours, and to establish a temporary merchant information database within 90 days, with a complete database to be built within 12 months. For high-risk industries such as casinos, gambling operators, virtual asset service providers, currency exchange operators, and remittance companies, the draft requires relevant institutions to establish direct inter-institutional cooperation relationships and undergo stricter background checks and transaction limit management.
For existing layered cooperation arrangements, the draft sets a 6-month review window and a 6-month rectification period, with non-compliant cooperation relationships facing enforcement actions after the rectification period. If finalized after consultation, the circular will take effect 15 days after publication. The BSP stated that this move aims to promote a "comprehensive review" of OPS classification standards, licensing frameworks, and related risk management and regulatory considerations.
This freeze proposal is not an isolated measure—the BSP has previously led multiple rounds of blocking actions against unlicensed cryptocurrency trading platforms: on March 25, 2024, the National Telecommunications Commission of the Philippines, at the BSP's request, blocked access to Binance, the world's largest exchange at the time, and a month later requested Apple and Google to remove the Binance app from their stores. Subsequently, the BSP marked 50 unauthorized online trading platforms, and the SEC identified 10 unlicensed exchanges, including OKX, Bybit, and KuCoin. Recently, Coinbase and Gemini have also been added to the blocking list, while licensed local platforms like PDAX and GoTyme have accelerated their deployment of crypto-related services.
From an industry impact perspective, this freeze will directly block new payment institutions and crypto-related companies from obtaining compliant licenses in the Philippines. Existing licensed operators (such as PDAX and GoTyme), unaffected by the freeze, will enjoy market access advantages during this "window period," potentially accelerating the concentration of funds and users towards these existing licensed platforms. For cryptocurrency exchanges and payment technology companies that have not yet obtained BSP approval and still hope to enter the Philippine market through compliance pathways, their market access plans will be forced to delay by at least 12 months, further solidifying the trend of "local licensing determining access to the crypto market" in the Philippines.
Source: Public Information
ABAB AI Insight
The BSP's tightening of regulations on crypto assets and payment institutions is not the first instance—earlier in March 2024, the BSP led the blocking of access to Binance, then the world's largest exchange, in the Philippines, and within a month pushed for the removal of its app from Apple and Google stores. Subsequently, the BSP marked 50 unauthorized online trading platforms and recently included major international exchanges like Coinbase and Gemini in the blocking list. This further proposal to implement a 12-month freeze on new payment institution registrations is a continuation of the BSP's regulatory path since 2024, evolving from "case-by-case blocking of unlicensed platforms" to a "systematic suspension of new license issuance."
From the perspective of market access resource allocation, the only entities that can continue to operate legally and expand crypto-related businesses during the freeze are local platforms that have previously completed the BSP licensing process (such as PDAX and GoTyme). This means that user funds, merchant resources, and venture capital that might have been dispersed to new entrants will be forced to continue concentrating on these existing licensed institutions during the freeze, effectively creating a "license moat" for current license holders and delaying the entry of new capital and players into the competition.
This is highly similar to the regulatory approach of "total control, only reduction, no increase" on third-party payment licenses previously implemented in mainland China, and aligns with the lengthy approval process for BitLicense applications set by New York State in the U.S., which objectively raised the compliance threshold for crypto enterprises. The Philippines is currently at a stage where emerging Southeast Asian markets, after experiencing early "license arbitrage and regulatory lag" in the crypto and payment technology sectors, are entering a regulatory catch-up period of "consolidating existing stock and pausing new growth," rather than a loose experimental phase of industry expansion.
Essentially, this represents a "regulatory change"—mechanistically, the BSP is narrowing the payment chain that could have previously circumvented regulatory scrutiny through multiple intermediaries by freezing the issuance of new licenses and requiring a "direct merchant-to-institution" model for VASPs, thus re-establishing a closed system that is directly controlled, traceable, and reportable in real-time by regulated institutions. This adjustment effectively shifts the market access pricing power in the crypto and payment sectors from "who can quickly bypass regulation to expand operations" back to "who can first meet the central bank's compliance requirements," a judgment standard led by regulatory authorities.
ABAB News · Cognitive Law
Once regulation hits the pause button, existing players become the only winners.
The scarcity of licenses is always the most valuable moat.
The stronger the traceability of the payment system, the less space is left for gray areas.