These last few years' leaps in technology have not spared the financial sector. The COVID pandemic only accelerated the pace. Fintech has given birth to Electronic-Money (e-Money) and Virtual Assets (VA's) which have proven to be more accessible and inclusive than traditional banking. The advent of Fintech has revolutionized the way money is transferred, exchanged, and invested.

The reason could be there are more people with mobile phones than bank accounts, according to the Central Bank of the Philippines (Bangko Sentral ng Pilipinas or "BSP").1 Notably, many of those who don't have bank accounts, have E-Money or E-wallets and some have Virtual Assets. The BSP hopes that with digital financial inclusion, more and more of those who have never been open to traditional banking be given greater access to engage in the formal financial sector.

The Philippines is home to one of the longest quarantine periods in the world. Filipinos have been forced to play catch up quickly to the global revolution of most users/customers digitizing most of their daily financial transactions.

While E-Money has been around for quite some time in the Philippines, the phenomenon of cryptocurrency is just starting to creep into the consciousness of the Philippine public. And with the rise of users of both E-Money and those investing in cryptocurrency the profitability of endeavors in the financial industry is opening up a huge opportunity for investors, locally and abroad.

Philippine Central Bank uses the Regulatory Sandbox Approach

The Bangko Sentral ng Pilipinas (BSP) is the central bank of the national government. The BSP has decided to take a proactive approach to FinTech players and actively engage them rather than regulate from a strict vantage point.

According to BSP Governor Benjamin Diokno, Fintech players have transformed the delivery of financial services by offering "far more convenient" ways of executing financial transactions. They have empowered the unbanked and underbanked to participate in the economy through easier access to financial services. Governor Diokno has pointed out blockchain and virtual currency technology as particularly promising.

Governor Diokno outlined the three (3) key principles to regulating FinTechs2:

  1. Regulations that are risk-based, proportionate, and fair;
  2. maintain an active collaboration with multiple stakeholders; and
  3. ensure that innovations must work for the benefit of customers, particularly the vulnerable ones.

With this in mind, the BSP openly engages with stakeholders through a flexible "test and learn" environment or the regulatory sandbox that allows the regulators to fully understand emerging business models while at the same time assessing attendant risks. This has resulted in one of the most advanced regulations in Southeast Asia.

E-Money and Virtual Assets

E-money and VAs are fundamentally different, though both are forms of digital data that hold value. E-money and VA's hold potentially similar uses, both can be a form of payment for goods and exchange and act as a replacement for physical cash.

However, there is a difference in how they are valued. E-money is a digital representation of fiat currency. It has a fixed value, is freely convertible to fiat, and is treated as legal tender.

Cryptocurrencies such as bitcoin, ethereum, and litecoin on the other hand, act as a form of digital commodity. Though branded as a replacement for fiat currency, they act more like a form of investment and a speculative one at that. Cryptos, as the term implies are also in digital form, but are stored using cryptography. These can be then be decentralized, so that there's no one central storage system, and no need for a financial institution to verify the transaction.

To further identify the differences BSP, as the regulator of e-Money and VAs, defines e-Money as a monetary value represented by a claim on its issuer, which are:

  1. electronically stored in an instrument or device;
  2. issued against receipt of funds of an amount not lesser in value than the monetary value issued;
  3. accepted as a means of payment by persons or entities other than the issuer; and
  4. withdrawable in cash or cash equivalent;3

The BSP further states that covered electronic instruments or devices are: Cash cards, e-wallets accessible via mobile phones or other access devices, stored value cards,, and other similar products.4 Additionally, BSP requires that all e-money shall be issued following Section 702.5

Virtual Assets are a type of digital unit that can be digitally traded, or transferred, and can be used for payment or investment purposes.6 Further, they can be further defined as: Property, proceeds, funds, funds and other assets, and other corresponding value. It further includes digital units of exchange that have:

  1. Centralized repository or administrator;
  2. Decentralized and have no centralized repository or administrator; or
  3. Created or obtained by computing or manufacturing effort. 7

Unlike e-Money, the value of VA's are not determined on its face.8 The value exchanged for fiat currency can either go higher or lower depending on the value created within the community of VA users.9 In other words, the value of the VA would largely depend on the price the market of users would be willing to pay. A prime example of this is bitcoin. Despite no underlying asset, an investment of USD 100 in 2010 would amount to USD $ 9.2 million after only ten years.

E-Money Issuers (EMI's) and Virtual Asset Service Providers (VASPS)


As early as 2009, the BSP issued BSP circular No. 649-09, approving the issuance of e-Money and operation of Electronic Money Issuers (EMI).10 It provided 3 classifications to EMI's:

  1. Banks (EMI-Banks)
  2. Non-Bank Financial Institutions (NBFI) Supervised by the BSP
  3. (EMI-NBFI) Non-bank institutions registered with the BSP as a money transfer agent under Section 4511N of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) (hereinafter called EMI-Others).11

Additionally, the capitalization requirement for an EMI is Php 100 Million.12 For EMI-Banks and EMI-NBFI's, they should meet the minimum capitalization requirements as banks or NBFI's, which are inherently higher than the minimum requirement of Php 100 Million.

The BSP provides a list of supervised EMI's. Upon a successful application of an entity, they shall be allowed to operate as an EMI. Note, that there is an additional requirement for EMI-others and EMI-NBFI's to register for a Quasi-Banking License to engage in lending activities.13

One of the limitations on EMI is subject to a monthly load limit of Php 100,000.00, which shall be subject to BSP approval for higher load limits.14


For VASPS, the BSP defines them as those who conduct the following activities:

  1. Exchange Between VAs and fiat currencies
  2. Exchange between one or more forms of VAs
  3. Transfer of VAs
  4. Safekeeping and/or administration of VAs or instruments enabling control over VAs.15

The capitalization requirements depend on whether they perform safekeeping and administration of VAs, as mentioned above otherwise known as a VA custodian16. For those VA's performing as VA Custodians, a minimum required capital of Php 50 million is required.17 Those VA's not performing safekeeping duties are required to have a minimum capitalization of Php 10 Million.18

For VASP's to begin their operations, they must first secure a Certificate of Registration to engage as a Money Service Business (MSB).19 Unlike e-money, VA's aren't subject to monthly load limits, but transactions above Php50,000.00 or more or its equivalent to foreign currency require the VASP to either: As an originating institution acquire the originator information and send such information to the beneficiary institution or as a beneficiary institution obtain and hold originator information as well as required and accurate beneficiary information.20 Further, large pay-outs of more than Php500,000.00 will require enhanced due diligence and allow the payment only via check or direct credit to deposit accounts, or account to account transfers using electronic fund facilities.21

Considering all that, one great thing for investors to consider is the fact that an EMI can also be a VASP. No EMI or VASP is prevented from operating as an institution that provides both services, as long as they are regulatorily compliant and their licenses are approved. On that note, there are currently corporations operating as EMI and VASP.

Lastly, one of the biggest restrictions, deterring potential investors in the Philippines, is the perennial fondness for restrictions on foreign ownership. However, those restrictions do not apply to both EMI's and VASPS. The absence of restrictions allows a foreign individual or a 100% foreign-owned corporation to engage in the business of EMI or VASP with full ownership and management rights.

The Anti-Money Laundering Act

Potential Fintech investors should understand the Anti-Money Laundering Act (AMLA) of the Philippines and the governing body of the Anti-Money Laundering Council. Which monitors illegal transactions and banking activity, that will be under the coverage of the Fintech's business operations whether it be EMI's or VASP's.

Money Laundering laws governing the Philippines cover EMI's, while VASP's on the other hand are covered by the AMLA as an MSB under BSP Supervision.22 Their coverage means that they must register with AMLC to report and monitor covered transactions.23

To comply with such directives, the EMI, must comply with the Customer Identification Requirements. Mainly, it requires institutions to establish and record the true identity of their clients based on official documents.24 A memorandum on VA's have a similar requirement.25 If the client is a corporation it shall verify the legal existence and organizational structure of the corporation as well as the authority and identification of all persons acting on its behalf.26 The EMI or VASP shall also be required to develop a risk-based customer identification process.27

Once the EMI or VASP operates they will be also required to continuously update all identification information and documents of existing customers and a risk-and materiality and on-going monitoring of customers which will be part of its due diligence.28 The EMI or VASP shall report to the AMLC, any suspicious transactions within five working days, 10 days if the supervising authority prescribes a longer period.29

Data Privacy Act

Fintech investors will deal with its customers' data and the processing of such information. This will bring their business, much like other banks, under the scope of the Data Privacy Act of 2012. The data privacy Act of 2012 is the main law that governs Data Privacy in the country. The data privacy act of 2012, which applies to all the personal information of both natural and juridical persons including the personal information of controllers and processors, even if they are not found in the Philippines that use equipment in the Philippines or maintain a branch or an office. Fintechs will be allowed to process personal information provided the information is collected for a specified and legitimate purpose and that they maintain the general principles required from a controller.30 The fintech company that processes such information shall keep in mind the rights of the data subject, where they shall inform the data subject of their information being processed. The fintech must guarantee the security of the personal information that they process.31

Final Note

Fintech is the future of the financial sector. And as was shown by the effects of the pandemic, it is slowly becoming the new normal. There is a lot of opportunity for those who wish to invest in a sector still in its infancy, especially in regard to the demands of a contactless society.


1. Bangko Sentral ng Pilipinas, Issue No. 8, Series of 2018, Financial Inclusion In the Philippines available at (2018).

2. Speech titled "Inclusion and Digital Transformatio: A Collaborative Approach to Regulating Fintech dated 11 October 2019 at Hyatt Ballroom

3. 702 Issuance and Operations of Electronic Money, BSP available at (last accessed 19 April 2021)

4. Id.

5. Id.

6. BSP Circular No 1108 series of 2021

7. Id.

8. Id.

9. Id.

10. Guidelines Governing the Issuance of Electronic Money (e-Money) and the Operations of Electronic Money Issuers (EMI) in the Philippines, BSP Circular No. 649-09, (March 9, 2009).

11. Id.

12. Id.

13. Id.

14. Id.

15. BSP Circular No 1108 series of 2021

16. Id.

17. Id.

18. Id.

19. Id.

20. Id.

21. Id.

22. Revised Rules and Regulations of Republic Act No. 9160, As Amended By Republic Act No, 9194 and Republic Act No. 10167 (2012)

23. Id.

24. RIRR of RA 9160 (2012)

25. Guidelines on the Re-Registration of Virtual Currency Exchanges, Memorandum No. M-2021-013 (2021).

26. RIRR of RA 9160 (2012)

27. Id.

28. Id.

29. Id.

30. An Act Protecting Individual Personal Information In Information And Communications Systems In The Government And The Private Sector, Creating For This Purpose A National Privacy Commission, And For Other Purposes [Data Privacy Act of 2012], R.A. No. 10173 (2012).

31. Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.