Philippines Central Bank Proposes 12-Month Freeze on New Payment Operators

The Bangko Sentral ng Pilipinas (BSP) has introduced a draft circular proposing a 12-month suspension on all new registrations for Operators of Payment Systems (OPS). This move is intended to allow regulators to reassess how these businesses are classified, licensed, and managed.

During this proposed period, which would commence 15 days after the circular's publication, the BSP will continue to evaluate existing applications but will not approve or deny them, leaving them in regulatory limbo. Any entity wishing to engage in OPS-related activities during the freeze will require prior authorization from the BSP.

In addition to the freeze, the BSP is also implementing stricter requirements for Virtual Asset Service Providers (VASPs) that facilitate merchant acquisitions. Under the new rules, merchant acquirers must establish direct arrangements with regulated VASPs, enhancing due diligence and traceability of payments through a centralized database.

This regulatory tightening follows a moratorium on new VASP licenses that was initially imposed in September 2022 and has now been extended indefinitely until September 2025. The BSP's motivation for these changes centers on improving risk management and consumer safeguards, particularly concerning fraud and money laundering.

As the BSP seeks public feedback on the draft proposal, the implications for the cryptocurrency market in the Philippines are significant, potentially leading to a slower pace of crypto adoption within formal payment systems.