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The Central Bank of the Philippines is paving the way for virtual asset service providers (VASPs) and financial institutions to start issuing stablecoins with regulatory fences in place.
U statement issued on May 9, Coins.ph, a VASP based in the Philippines, announced that it has received approval from the Bangko Sentral ng Pilipinas (BSP) to pilot the PHPC stablecoin backing the Philippine peso.
According to the statement, the pilot will take place within the BSP’s regulatory sandbox, which allows the BSP, which administers the country’s regulatory framework for VASP, to assess the functionality of the PHPC and assess its potential impact on the country’s financial system. Coin.ph indicated that the stablecoin will be pegged 1:1 to the Philippine peso and will be redeemed in cash and cash equivalents in domestic bank accounts – key regulatory requirements designed to ensure that owners’ redemption rights are protected.
Within the sandbox environment, Coins.ph will be able to demonstrate PHPC’s application in use cases such as remittances, crypto-asset exchanges, and as collateral and liquidity in decentralized finance (DeFi) applications. The arrangement will allow supervisors from the BSP to ensure that Coins.ph meets the central bank’s expectations regarding regulatory requirements related to consumer protection, anti-money laundering and countering the financing of terrorism (AML/CFT), data protection and other legal and regulatory measures .
If the pilot is deemed successful, Coin.ph will eventually be allowed to introduce PHPC to the wider consumer market.
This news from the Philippines comes amid increasing action on global regulation of stablecoins. As we noted at Elliptic’s Regulatory outlook for 2024, financial watchdog agencies are busy setting rules around stablecoins to ensure issuers address key risks related to issues such as consumer protection, financial crime and financial stability. The sense of urgency to incorporate stablecoin regulation is growing as the technology continues to gain greater adoption, and as innovators continue to explore the potential of stablecoins in use cases such as payments and remittances.
Coins.ph’s announcement also marks another important stablecoin development in the APAC region – a topic we covered on April 24 webinar on the stablecoin landscape in APAC. In that webinar, a panel of representatives from firms in Hong Kong, Singapore and Japan discussed the regulatory developments taking place across the region regarding stablecoins.
You can download our on-demand webinar on the stablecoin landscape in the APAC region here.
US Congress backs repeal of SEC custody policy over Biden’s veto
US House of Representatives has voted to reverse a controversial policy stance taken by the Securities and Exchange Commission (SEC) under President Joe Biden.
On May 8, the majority of the US House of Representatives voted in favor of Resolution 109 HJ – a measure condemning and calling for the reversal of the SEC’s decision Staff Accounting Bulletin 121 (SAB 121). Published in April 2022, in SAB 121, the SEC indicated that when banks hold cryptocurrencies, they should be shown as a liability on their balance sheet for accounting purposes. The policy, articulated as guidance to SEC staff rather than formal rulemaking, could cause U.S. banks that hold cryptocurrencies to suffer significant losses — and many in the financial services industry have indicated that this position makes it undesirable for banks to directly handle cryptocurrency, potentially hindering innovation.
Opponents of SAB 121 — which includes the crypto industry, financial institutions and many Republican members of the US Congress — argue that the SEC should not have adopted such a sweeping and consequential policy without first engaging in formal rulemaking. Furthermore, they argue that the policy reflects the general anti-crypto stance taken by SEC Chairman Gary Gensler, who has advocated an aggressive enforcement policy toward suspected non-compliance in the crypto space. Resolution HJ 109, if passed, would invalidate SAB 121 and prevent the SEC from taking similar further actions in the future.
However, it remains very uncertain whether the resolution of the House will be adopted. To pass, the House version of the Resolution must be voted on by the US Senate and then signed by the President. In the Senate, the SEC has important and powerful backers among crypto-skeptical members of the Democratic Party, such as Sens. Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, who could stand in the way of a resolution.
In addition, President Biden said ua statement that he will veto any resolution that reaches his desk seeking to overturn SAB 121 — arguing that the rule is critical to protecting consumers from crypto-asset-related losses.
The US, Great Britain and Australia are partners in the goal of sanctions against the leaders of the Lockbit group
The governments of the United States, the United Kingdom, and Australia have recently come together joint action sanction the head of one of the world’s most dangerous ransomware gangs.
On May 7, the US Treasury Department announced imposing sanctions on Dmitry Khoroshev, the leader of the Russian LockBit ransomware gang. According to the Treasury Department, since January 2020, the LockBit gang has received crypto-asset payouts totaling more than $500 million by launching ransomware attacks against critical infrastructure such as hospitals and financial institutions. The US government alleges that Khoroshev is the leader of the group and developed the malware it uses to attack victims.
In coordination with the US announcement of sanctions against Khoroshev, the UK and Australia also added him to their sanctions list. This marks a trend in which the US and the UK are increasingly working to coordinate the imposition of sanctions against actors using crypto-assets in an effort to ensure the effectiveness of sanctions. Earlier this year, the US and UK jointly sanctioned Gaza Now, an exchange service linked to Hamas, and in September 2023 jointly sanctioned members of the Trickbot cybercriminal gang.
The May 7 sanctions announcement was also the first time the governments involved had revealed Horoshev’s identity as the leader of LockBit. In addition to imposing sanctions on Horoshev, the US Department of Justice announced criminal charges against him, and the State Department offered a $10 million reward for his arrest.
Australia seeks information from exchanges to identify cryptocurrency tax evasion
Australian tax authorities are looking for potential cryptocurrency tax evaders. According to recent reports, the Australian Taxation Office (ATO) plans to request the personal and transactional details of more than one million users of Australian cryptoasset exchanges. The ATO said it plans to use the data to identify individuals who do not pay capital gains tax on cryptocurrencies, and users are responsible for paying once they sell cryptocurrencies or use them to pay for goods and services.
Australia is not the first country to seek unpaid taxes from crypto users. The US Tax Service previously issued the so-calledJohn Doe calls” to crypto exchanges seeking user information, and the UK’s Revenue and Customs has also requested big data from exchanges to purposes of tax enforcement. On April 30, the US Department of Justice announced Tax fraud charges against Roger Ver, one of Bitcoin’s earliest and most vocal proponents, for allegedly providing false and misleading information about his Bitcoin profits when he renounced his US citizenship.
Taiwan plans tougher penalties for cryptocurrency laundering
Taiwan’s government plans to impose tougher penalties on crypto exchanges that do not comply with anti-money laundering laws. According to reporting since early May, Taiwan’s Ministry of Justice (MoJ) proposed amendments to Taiwan’s AML/CFT laws that would affect the crypto industry by allowing Taiwanese regulators to initiate criminal charges against crypto exchange operators.
Under the new rules, executives of crypto exchanges operating in Taiwan without regulatory approval could face up to two years in prison; Non-compliant crypto exchanges can also be fined up to $1.5 million for violating AML/CFT laws.
The proposed amendments will be debated by Taiwan’s parliament and, if approved by the parliament, will eventually be incorporated into local law. The proposals come as organizations around the world, such as the Financial Action Task Force (FATF), have called on multiple jurisdictions to step up their enforcement of AML/CFT laws related to crypto-assets in an effort to combat financial crime. .
Indonesia is setting up a crypto watchdog to oversee the introduction of regulation
Regulators in Indonesia have established a special body to ensure the smooth implementation of the country’s regulatory framework for cryptoassets. According to reports In early May, Indonesia’s Commodity Futures Trading Supervisory Agency (Bappebti) formed a committee that will be responsible for overseeing the crypto industry in accordance with the country’s regulatory framework launched in January this year.
The crypto committee formed by Bappebti will consist of several government agencies and will include representatives from regulated crypto businesses and academics, with the aim of encouraging discussion on the appropriate regulatory response to developments in the industry.
As one of the largest economies in the APAC industry, Indonesia has long been seen as a potentially promising market for crypto industry activity – but the country has been slower than some others in the region to develop a regulatory framework for crypto. The establishment of Bappebti’s cryptocurrency monitoring board indicates significant progress in Indonesia’s readiness to create a meaningful legal and regulatory framework for crypto.
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