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