The Philippines is proposing a 12-month freeze on new payment-system operator registrations as its central bank undertakes a broader review of the country’s rapidly expanding payments sector and tightens controls around cryptocurrency-linked transactions.
Under a draft circular, the Bangko Sentral ng Pilipinas would suspend the acceptance and processing of new applications to register as an Operator of Payment System, or OPS. The suspension would last 12 months from the final circular’s effective date and allow the BSP to conduct what it describes as a “holistic review” of its OPS taxonomy, licensing framework and associated risk-management requirements. Applications submitted before the suspension could continue to be evaluated, but the BSP would neither approve nor reject them while the moratorium remains in place. Applicants would also be prohibited from beginning activities requiring OPS registration unless separately authorized by the central bank.
Crypto Firms Face Direct Merchant Requirements
The draft goes significantly beyond the registration pause by tightening how banks and other BSP-supervised institutions handle payment relationships involving virtual asset service providers. Regulated VASPs would be placed among categories requiring enhanced controls, alongside casinos, gaming businesses handling player funds, money-service businesses and lawful adult-oriented businesses. Merchant acquirers would generally be required to establish direct contractual relationships with regulated crypto businesses rather than allowing them to operate behind multiple payment facilitators or aggregators. The requirement is designed to ensure financial institutions can identify the actual merchant receiving funds and reconstruct transactions from payment through settlement. Institutions would have to apply enhanced due diligence and closer transaction monitoring to these relationships.
They could also impose risk-based restrictions covering transaction values, settlement schedules and total financial exposure. The rules would apply to virtual asset businesses requiring licenses, registrations or authorization from the BSP, Philippine Securities and Exchange Commission or another relevant regulator. The proposal does not prohibit cryptocurrency trading or revoke existing VASP licenses.
BSP Targets Layered Payments and Merchant Fraud
The broader objective is to reduce payment structures that obscure the identity of merchants or ultimate beneficiaries. Under the draft, a supervised institution could not continue processing a transaction if the underlying merchant cannot be identified or the payment cannot be attributed and reconciled to that merchant. Existing layered merchant arrangements would also face review. Financial institutions would receive six months after the rules become effective to assess existing relationships and another six months to correct deficiencies. Arrangements remaining noncompliant after that period could face regulatory enforcement. The BSP also proposes creating a National QR Code Merchant Database covering businesses accepting payments through QR Ph, the Philippines’ interoperable QR payment standard. The database would contain merchant identities, registration and licensing information, settlement accounts, beneficial ownership information and risk classifications.
An interim repository would be required within 90 days of the rules taking effect, while the complete database would become operational within 12 months. Payment institutions would additionally have to report material fraud, scams, sanctions breaches, cybersecurity incidents, unlicensed activities and illegal merchant activity within 24 hours of detection. The proposals represent another step in the Philippines’ effort to bring its expanding digital-asset economy more firmly inside regulated financial infrastructure. The BSP already maintains a separate moratorium on new VASP licenses, meaning the latest proposal could simultaneously constrain new entrants into both crypto services and parts of the broader payments sector. However, neither measure represents a cryptocurrency ban.
The new draft primarily targets the infrastructure connecting regulated crypto businesses with banks, payment processors and peso payment rails. It also remains subject to consultation. If adopted in its current form, the circular would become effective 15 days after publication in the Official Gazette or a newspaper of general circulation. Until that process is completed, the proposed 12-month freeze and accompanying crypto-payment restrictions have not yet taken effect.
