The Philippines Moves Against Foreign Crypto Exchanges
- The Philippines is mounting pressure on foreign exchanges such as Binance to get registered.
- Crypto regulation and policies remain unclear in many parts of the world.
Philippine authorities are mounting significant pressure on crypto platforms, with local regulators and think tanks calling out several crypto exchanges for alleged violations. In addition, the nation’s central bank has warned the public in a note it issued on Thursday, advising them against conducting business with unregistered or foreign crypto exchanges.
The Bangko Sentral ng Pilipinas (BSP) cautioned crypto users in the country, urging them to forfeit virtual service providers that are based in other countries or not registered with authorities. However, the central bank revealed that this move ensured adequate protection of crypto users in the Philippines. According to the financial regulator, crypto assets are risky by default, but such risks are elevated when users transact with unregistered companies or foreign exchanges.
A part of the BSP’s note read,
The Bangko Sentral ng Pilipinas (Bangko Sentral) strongly urges the public not to deal with Virtual Asset Service Providers (VASPs) that are either unregistered or domiciled abroad. On top of the inherent risk of price volatility associated with Virtual Assets (VAs), VASPs that are based abroad may present additional challenge on enforcing legal recourse and consumer protection and redress mechanisms for local customers, among others.
Crypto users in the Philippines are left with 19 registered virtual service providers. The numbers are unlikely to expand in the coming months since the BSP plans to stop granting new licenses to virtual service providers on September 1. Platforms like Binance have less than two weeks to get the appropriate registration and license or risk losing operations in the country.
The Philippines’move to ban unregistered exchanges comes shortly after its counterpart in South Korea announced plans to restrict unregistered foreign exchanges. South Korea’s Financial Intelligence Unit (FIU) listed about 16 exchanges which could see their operations halted if they fail to register in the coming weeks.
The FIU reportedly urged the Korea Communications Commission to restrict local access to these foreign exchanges. In addition, several Asian regulators have accused foreign crypto platforms of violating local laws by offering financial services without an adequate license.
A local think tank group in the Philippines, Infrawatch PH, accused Binance of using third-party companies that employs Filipinos to run its operations without a license. In response to the claims against Binance, SEC Director Oliver Leonardo released a letter warning the public against investing in Binance. He wrote,
Based on our initial assessment, Binance is not a registered corporation or partnership. Consequently, Binance does not possess the necessary authority and or license to solicit investments as only registered corporations can apply for and be issued the necessary licenses to solicit investments. Considering these circumstances, we caution the public not to invest with Binance.
Crypto Regulation in Asia
Asia has one of the most active crypto markets in the world. The region has long been at the forefront of technology, and the growing use of cryptocurrencies and blockchain has confirmed this trend. Roughly half of all cryptocurrency trades globally take place in Asia. The continent also has a growing number of companies offering crypto services. However, authorities are growing concerned about the number of illegal activities in the industry.
Asian countries currently have varying crypto laws and policies. The overall regulatory system is disorganized and diverse. Countries like China have banned crypto mining and imposed restrictions on trading activities. However, North Korea has relied heavily on cryptocurrencies to navigate Western sanctions and fund its nuclear weapon agenda. However, like the rest of the world, it has an unclear regulatory framework for retail and institutional investors.