In Memorandum No. M-2022-035, the Bangko Sentral ng Pilipinas ("BSP") introduced a modified approach in granting new Virtual Asset Service Provider ("VASP") licences, as approved by the Monetary Board. BSP recognised that while VASPs offer opportunities to promote greater access to financial services at reduced costs, they also pose varied risks which could undermine financial stability. In view thereof, BSP seeks to strike a balance between promoting innovation in the financial sector and ensuring that associated risks remain within manageable levels.
Under the modified approach, the regular application window for new VASP licenses shall be closed for a period of three years starting 1 September 2022, while only existing BSP supervised financial institutions ("BSFIs") may be granted new VASP licences. BSP further noted that the said closure is subject to re-assessment based on market developments.
BSP may entertain new applications of existing BSFIs who wish to expand operations by offering VASP services. In evaluating these applications, due consideration will also be given to the BSFIs' risk management system, including appropriate client suitability assessment and customer onboarding practices, and intensified financial consumer education and awareness programs. Additionally, existing BSFI applicants must be rated as "stable" in its Supervisory Assessment Framework.
Previously, the BSP imposed a three-stage application process for the issuance of a license to register as a VASP. The stages are as follows: Stage 1 refers to the BSP’s assessment of the applicant’s eligibility; Stage 2 refers to the application for the issuance of a Letter of No Objection for the VASP to register its Articles of Incorporation and By-laws with the Securities and Exchange Commission; and Stage 3 refers to the application for grant of a Licence to operate as VASP and to offer advanced electronic payment and financial services.
Following the modified approach, applications that have been completed or which have passed Stage 2 of the licensing process on or before 31 August 2022, will still be processed and assessed for completeness and sufficiency of documentation or information submitted, as well as compliance with the licensing criteria to operate as a VASP based on Stage 3 requirements. Those applications with incomplete requirements as of 31 August 2022 will no longer be processed, and will be returned and tagged as "closed". Beginning 1 September 2022, BSP will no longer entertain nor accept new applications from non-BSFIs.
