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Feature March 19, 2026

Regulating Virtual Assets in the Philippines: A Guide to the BSP Framework for Virtual Assets and VASPs

By Atty. John Manuel Velasco, Associate Lawyer

Cryptocurrency’s rapid growth has led regulators worldwide to create supervisory frameworks. In the Philippines, the Bangko Sentral ng Pilipinas (BSP) is the main regulator for virtual currencies and Virtual Asset Service Providers (VASPs), primarily through BSP Circular No. 944 (2017) and amendments, including Circular Nos. 1021, 1033, and 1108.

The Philippines occupies a distinctive position in the global cryptocurrency ecosystem. Home to one of the world’s largest communities of overseas Filipino workers, the country sees billions of pesos in inbound remittances every year — and many Filipinos now use digital means to send that money faster and more cheaply than traditional bank transfers allow. Add to that a large portion of the population without access to conventional banking services, and the result is a country with genuine, everyday reasons to embrace digital currencies. That popularity has attracted serious attention from regulators. The Bangko Sentral ng Pilipinas—the BSP, the country’s central bank—has taken the position that cryptocurrency is here to stay and that the responsible move is to bring it under proper oversight rather than push it underground.

The BSP’s approach rests on an important distinction: it does not regulate Bitcoin, Ether, or any other cryptocurrency as a financial product, as stocks or bonds are. It regulates businesses that offer services involving those currencies. Cryptocurrency exchanges, digital wallet providers, payment processors that use crypto to move money across borders — these are the entities the BSP is concerned with. Collectively, they are called Virtual Asset Service Providers, or VASPs, and any business that falls within that definition must be registered with the BSP before it can legally operate.

A Virtual Asset Service Provider is defined under the BSP framework, consistent with FATF standards, as any entity that conducts one or more of the following activities or operations for or on behalf of another natural or legal person as a business: (1) exchange between virtual assets and fiat currencies; (2) exchange between one or more forms of virtual assets; (3) transfer of virtual assets; and (4) safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets. In the Philippine context, this definition captures cryptocurrency exchanges, wallet service providers, payment processors utilizing virtual assets, and—increasingly—decentralized exchanges and liquidity protocol operators, insofar as they exercise sufficient control or management over the protocol to be deemed to be providing VASP services.

Legally, Philippine regulations do not employ the term “cryptocurrency” as a term of art; instead, BSP Circular No. 944 introduced the concept of “virtual currency” (VC) as “any type of digital unit that is used as a medium of exchange or a form of digitally stored value created by agreement within the community of VC users” and which is neither issued nor guaranteed by any government or central bank.

Subsequent regulatory issuances, particularly those aligned with FATF Recommendation 15 and its 2019 amendment, have adopted the broader term “virtual asset” (VA) to encompass the full spectrum of cryptographic digital representations of value. The FATF defines a virtual asset as a digital representation of value that can be traded, transferred, or used for payment or investment purposes, expressly excluding digital representations of fiat currencies, securities, and other financial assets that are subject to existing regulatory frameworks.

This definitional evolution is legally significant, as it has expanded the regulatory perimeter in the Philippines to capture not merely payment-focused cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), but also utility tokens, governance tokens, and—more contentiously—certain forms of NFTs when they function as stores of value or investment vehicles.

The rules governing VASPs did not appear all at once. They have developed through a series of circulars issued by the BSP over the past several years. The foundation was laid in 2017 with BSP Circular No. 944, which established the Philippines’ first formal licensing regime for cryptocurrency exchanges. It required these businesses to register with the BSP before opening their doors, set out basic operating standards, and made clear that cryptocurrency is not legal tender—meaning no one is legally obligated to accept it as payment. A year later, Circular No. 1021 raised the bar for financial crime compliance, requiring crypto businesses to conduct more thorough checks on high-risk customers and to monitor transactions in real time. This update was driven in part by the Philippines’ membership in the Financial Action Task Force, the international body that sets global anti-money laundering standards — standards the country has a strong interest in meeting.

In 2019, Circular No. 1033 introduced the Travel Rule. Under this rule, any virtual asset transfer amounting to P50,000.00 or more (or its equivalent in foreign currency) must be accompanied by information identifying both the sender and the recipient, much like the rules that apply to conventional bank wire transfers. The most comprehensive update to date came with Circular No. 1108 in 2021, which restructured the registration system, introduced tiered regulatory categories based on a business’s size and complexity, and set a minimum capital requirement.

Taken together, these rules represent a serious and reasonably mature regulatory framework by regional standards. But the framework has real limitations, and the technology has moved faster than the rules can keep up. Perhaps the most significant structural problem is that the entire framework is built on BSP circulars, not on a law passed by Congress. That distinction matters more than it might seem. Circulars are easier to challenge in court than legislation, and they limit the BSP’s enforcement powers in ways that primary legislation would not.

Another area of uncertainty involves the relationship between the BSP and the Securities and Exchange Commission. Some digital tokens—particularly those sold to raise funds for a project, in a manner similar to shares in a company—could be classified as securities under Philippine law, bringing them under the SEC’s authority rather than, or in addition to, the BSP’s. Without a clear legal line between the two agencies’ jurisdiction, businesses can find themselves genuinely unsure of who they need to answer to. This ambiguity is not just an inconvenience—it is a real compliance risk for anyone operating at the intersection of crypto and capital markets.

Despite these gaps, change is within reach. There is a broad consensus among legal professionals, industry participants, and regulators that a comprehensive Digital Assets Act is needed. Such legislation would be expected to draw clearer lines between BSP and SEC jurisdiction, create specific rules for decentralized finance and digital collectibles, and give regulators more effective enforcement tools. International pressure reinforces the case for action: as global standards on cross-border crypto transfers and financial crime compliance continue to evolve through bodies such as the Financial Action Task Force and the Bank for International Settlements, the Philippines will need to keep pace. Businesses operating here should expect the regulatory environment to keep changing and to become more demanding rather than less.

For anyone with a stake in the Philippine virtual asset market — whether as a business operator, investor, or developer — the practical implications are straightforward. Businesses whose activities fall within the VASP definition must be registered with the BSP before operating, must meet capital requirements, and must put robust anti-money laundering systems in place.

The Philippines has built more than most countries in the region have managed when it comes to regulating virtual assets responsibly. That is genuinely good news, and it reflects a pragmatic recognition that digital assets are not going away. But a framework built on policy circulars rather than statutes, and still catching up to technologies like decentralized finance and stablecoins, is one that still has work to do. Understanding where the rules are clear, where they are contested, and where they are silent is the starting point for anyone serious about operating in this space—and the reason that good legal advice, in this particular field, is not a luxury but a necessity.

References:

  • Cash remittances rise to US$2.9B in November. Link.
  • Frequently Asked Questions (FAQs) on Virtual Currencies. Link.
  •  Inclusion by Design: Building Bridges to Financial Health. Link.
  •  BSP Circular No. 1108, Series of 2021.
  •  Senate Bill No. 433 Digital Assets Act Filed on July 10, 2025, 20th Congress.

About the Author

This article is authored by Attorney John Manuel Velasco, Associate Lawyer at Zosa Borromeo Ong Vaño & Mirhan Law, whose practice focuses on Civil Law, Commercial Law, Regulatory Compliance, Fintech, & Gaming.