Philippines to Implement Government Regulations for Cryptocurrency by 2024
Crypto regulation in the Philippines is currently in a state of quasi-legality. It has not been fully accepted nor completely outlawed. While cryptocurrency transactions are legal in the country, crypto coins are not considered legal tender. However, the Philippines has taken a progressive and pragmatic approach to cryptocurrency, allowing its use as a payment method and issuing licenses to crypto exchanges and service providers. The country has a vibrant crypto community with various events, meetups, and initiatives supporting digital assets.
In 2024, Coinpedia provides an overview of the state of cryptocurrency in the Philippines. The governing body, Banko Sentral ng Pilipinas (BSP), has issued guidelines for virtual currencies (VCs). As the crypto world has experienced significant growth, the government has developed a regulatory framework for cryptocurrency. The Securities and Exchange Commission (SEC) is responsible for regulating securities, investments, and financial instruments in the Philippines.
Individuals or businesses operating VC exchanges must register with the BSP and adhere to operational mandates that include risk management practices and customer identification processes. These regulations aim to protect the financial system from potential abuse. The SEC has also established rules regarding Initial Coin Offerings (ICOs) and the use of crypto in investment schemes. To operate a crypto exchange, a VASP license is required, and additional licenses such as Electronic Money Issuer (EMI) and Remittance and Transfer Company (RTC) licenses may be necessary for additional services.
Recently, the central bank, BSP, issued Coins with the first Advanced Electronic Payments and Financial Services (EPFS) license, a credential previously reserved for traditional banks. As the Philippines does not have a unified ID card system, company tech systems must be capable of verifying valid ID documents from across the country.
In terms of timeline, notable events include the recognition of virtual currencies as a valid payment method by the BSP in 2017 and the SEC’s advisory on ICOs and crypto investments in 2018. The BSP introduced guidelines for Virtual Asset Service Providers (VASPs) in 2021, requiring them to obtain a license before operating in the country. The SEC cautioned against using unregistered exchanges in 2022 and presented draft rules for public review related to cryptocurrencies and digital financial products in 2023. As of early 2023, there are 19 registered VASPs in the country, and the SEC has partnered with the University of the Philippines Law Center to develop guidelines for digital assets.
In terms of taxation, the Philippines government has implemented a capital gains tax of up to 15% on cryptocurrency transactions to regulate and tax the growing crypto market. Filipinos who own or trade cryptocurrency must report their capital gains during annual tax filings. For active traders, cryptocurrency may be classified as inventory and subject to value-added tax (VAT) if it meets the applicable threshold. Cryptocurrency held for investment purposes is more likely to be considered an intangible asset and subject to ordinary income tax.
The Philippines remains an attractive destination for crypto due to its fast-growing economy and the increasing number of Filipinos owning digital assets. Regulators, such as the SEC, have demonstrated a commitment to a well-thought-out approach by partnering with the University of the Philippines Law Center to develop guidelines for digital assets. This collaborative effort ensures that regulations are robust and well-informed. The inclusive approach of involving the crypto community and businesses in shaping regulations is expected to continue in the future, further developing the regulatory framework in the Philippines.