With its popularity at an all-time high, it naturally earns the attention of the Bangko Sentral ng Pilipinas,

the country’s currency, money supply, and interest rate manager.

The Central Bank of the Philippines recently mentioned how Bitcoin is becoming popular in the
Philippines. BSP Deputy Governor Nestor A. Espenilla Jr. even said last January 2017 how Filipinos have
started using Bitcoin to send or receive remittances from abroad.

 Read More: How to Remit Money to the Philippines Using Bitcoin

Is Bitcoin Legal in the Philippines?

BTC Exchange services are now registered with the Bangko Sentral ng Pilipinas. Coins.ph, for example,
is registered as a Foreign Exchange Dealer (FXD), Money Changer (MC) & Remittance Agent (RA).
Furthermore, other businesses who want to engage in Bitcoin transfer needs to get registered with the
BSP. If not, no banks will deal with them.

What is the impact of this and why is it important?

The BSP wants to manage the risks involved with cryptocurrencies.

This is to prevent some people to inject dirty money into the country through Bitcoins that gets converted
to Pesos.

Stricter KYC (Know Your Customer)

Bitcoin companies will have stricter KYC (Know Your Customer). This means they will know who you are.
(This is the reason why I did not put anonymity as an advantage of Bitcoin in the Philippines).

So they are authorized to deal with banks

This registration allows bitcoin companies to deal with banks. In addition to the costs needed to establish
a business, buying bitcoin in the Philippines means the user pays in peso to receive Bitcoin. Coins.ph
allows you to fund your Bitcoin wallet directly from your bank. The same is true with the other websites.

Does the Bangko Sentral ng Pilipinas endorses Bitcoin?

The BSP made it clear that it was not endorsing bitcoins or any other digital currencies. This is because it
is not backed up by any commodity or monitored by a central bank. Here’s a quote from the Circular they
published early in 2017:

The Bangko Sentral does not intend to endorse any VC, such as bitcoin, as a currency since it is neither
issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate
VCs when used for delivery of financial services, particularly, for payments and remittances, which have
material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT),
consumer protection and financial stability.
What is the BSP’s Circular No. 944?

This circular details the guidelines the BSP had set up for businesses engaged in Virtual Currency
Exchange (such as Bitcoins) in the Philippines.

What is included in the Circular No. 944 by the BSP?

 Requirements for the Issuance of a Certificate of Registration

o Details how a VC exchange can obtain a certificate of registration
 Registration and Annual Service Fees
o Details the payments the VC exchange has to do
 Transactional Requirements for VC Exchanges
o If you remember the limits and verifications on Coins.ph and Buybitcoin.ph, this the
reason why.
 More on Limits of your Coins.ph account
 More on Limits of your Buybitcoin.ph account
 Technology Risk Management
o Details the technologies VCs must put in place to protect its business and its customers.
 Internal Control
o Details what the Exchange should do to make sure it follows the BSP Guidelines.
 Notification and Reporting Requirements
o Details what and when will the Exchange report to the BSP.

Additionally, the circular also detailed the penalties for every violation that they might do.

Read More: Check out the BSP’s Circular No. 944 here that discusses virtual currencies such as Bitcoin.

So is Bitcoin Legal in the Philippines?

Yes, it is legal to use Bitcoins in the Philippines. If anything, the BSP ruling is a step that allows everyone
to engage in bitcoin without fear of being classified as someone who doesn’t use traditional currency
(AKA the Peso). It is a step towards acceptance. Also, it is a way of telling us that we can deal with
bitcoins if we want.

So if a business wants to accept Bitcoins as a form of payment, the business is free to do so. If you are a
freelancer and you want to receive payment in Bitcoins, you are free to do so too. Again, it is important to
note that the BSP does not endorse virtual currencies for reasons already stated above. However, those
who wish can engage with bitcoins. Consequently, for BTC exchange services, you must register first and
follow the guidelines set up by the BSP.

In my article last December 2, 2017 about bitcoin, the most popular cryptocurrency in the market – I
mentioned that the legal status of bitcoin (and the other cryptocurrencies as well) is different from one
country to another – meaning it is still undefined. In some countries, the use of bitcoin is banned; in
other countries, the operations of bitcoin exchanges are allowed but they have to be duly registered
with the government.

In the Philippines, our Bangko Sentral ng Pilipinas (BSP) issued BSP Circular No. 944 which was
approved on February 6, 2017 and published in a newspaper of national circulation on February 9,
2017. In essence, BSP Circular No. 944 requires a virtual currency exchange that deals in Bitcoin to
obtain from the BSP a Certificate of Registration to operate as a remittance and transfer company. As
 a Virtual Currency (VC) Exchange, the bitcoin (or other cryptocurrencies) shall conform to the
guidelines issued by BSP on the maintenance of records and comply also with submission of
requirements of BSP.

One may ask: How about the legality of bitcoin in other countries? From Wikipedia, we get the
following information: “The legal status of bitcoin varies substantially from country to country and is
still undefined or changing in many of them. Whilst the majority of countries do not make the usage
of bitcoin itself illegal, its status as money (or a commodity) varies, with differing regulatory
implications. While some countries have explicitly allowed its use and trade, others have banned or
restricted it. Likewise, various government agencies, departments, and courts have classified bitcoins
differently. While this article provides the legal status of bitcoin, regulations and bans that apply to
this cryptocurrency likely extend to similar systems as well.”

Here’s a more detailed report of the legality of bitcoin by some selected country or territory taken
from the Wikipedia:

 “European Union – The European Union has passed no specific legislation relative to the status of the
bitcoin as a currency, but has stated that VAT/GST is not applicable to the conversion between
traditional (fiat) currency and bitcoin.

“According to the European Central Bank, traditional financial sector regulation is not applicable to
bitcoin because it does not involve traditional financial actors. Others in the EU have stated, however,
that existing rules can be extended to include bitcoin and bitcoin companies.

“The European Central Bank classifies bitcoin as a convertible decentralized virtual currency. In July
2014 the European Banking Authority advised European banks not to deal in virtual currencies such as
bitcoin until a regulatory regime was in place.

“In 2016, the European Parliament’s proposal to set up a taskforce to monitor virtual currencies to
combat money laundering and terrorism, passed by 542 votes to 51, with 11 abstentions, has been
sent to the European Commission for consideration. The European Commission also notably presented
a “parallel” proposal aimed at preventing tax evasion techniques as revealed in the Panama Papers. In
2017 it was revealed that the proposal will require cryptocurrency exchanges and cryptocurrency
wallets to identify suspicious activity;

 “G7 – In 2013 the G7’s Financial Action Task Force issued the following statement in guidelines which
may be applicable to companies involved in transmitting bitcoin and other currencies, ‘Internet-based
payment services that allow third party funding from anonymous sources may face an increased risk
of [money laundering/terrorist financing].’ They concluded that this may ‘pose challenges to countries
in [anti-money laundering/counter terrorist financing] regulation and supervision’;
 “South Africa – In December, 2014 the Reserve Bank of South Africa issued a position paper on Virtual
Currencies whereby it declared that virtual currency had ‘no legal status or regulatory framework’;
 “Canada – Bitcoin is expected to be regulated under anti-money laundering and counter-terrorist
financing laws in Canada, based on a federal budget bill (C-31), passed in 2014. Regulations must be
enacted before this provision becomes active, however, once they are it is expected that “dealers in
digital currency” will be regulated as money services businesses;
 “United States – The US Treasury classified bitcoin as a convertible decentralized virtual currency in
2013. The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in
September 2015. Per IRS, bitcoin is taxed as a property.

“In September 2016, a federal judge ruled that “Bitcoins are funds within the plain meaning of that
term”.

 “Mexico – Bitcoin is legal in Mexico as of 2017. It is to be regulated by the Fintech Law;

 “Nicaragua – News reports indicate that bitcoins are being used in the country;
 “Argentina – Bitcoins may be considered money, but not legal currency. A bitcoin may be considered
either a good or a thing under the Argentina’s Civil Code, and transactions with bitcoins may be
governed by the rules for the sale of goods under the Civil Code;
 “Bolivia – The Central Bank of Bolivia issued a resolution banning bitcoin in 2014;
 “Brazil – Not regulated, according to a 2014 statement by the Central Bank of Brazil concerning
cryptocurrencies, but is discouraged because of operational risks. In November 2017 this unregulated
and discouraged status was reiterated by the Central Bank of Brazil;
 “Israel – As of 2017, the Israel Tax Authorities issued a statement saying that bitcoin and other
cryptocurrencies would not fall under the legal definition of currency, and neither of that of a financial
security, but of a taxable asset. Each time a bitcoin is sold, the seller would have to pay a capital gains
tax of 25%. Miners, traders of bitcoins would be treated as businesses and would have to pay corporate
income tax as well as charge a 17% VAT;
 “Saudi Arabia – Bitcoin is not banned by any governmental party in Saudi Arabia. Only Saudi Arabian
Monetary Authority (sama) have warned from using it as it is high risk and recognized in SA and its
dealers will not be guaranteed any protection or rights;
 “Jordan – The government of Jordan has issued a warning discouraging the use of bitcoin and other
similar systems.

“The Central Bank of Jordan prohibits banks, currency exchanges, financial companies, and payment
service companies from dealing in bitcoins or other digital currencies. While it warned the public of
risks of bitcoins, and that they are not legal tender, bitcoins are still accepted by small businesses and
merchants.”