BSP Imposes 12-Month Freeze on New Payment Operator Applications, Risking VASP Licenses

The Philippines is pulling the brakes on new payment operators. The Bangko Sentral ng Pilipinas — the country’s central bank, known as the BSP — has put out a draft circular calling for a full 12-month freeze on new applications from operators of payment systems, or OPS. No approvals. No denials. Just a hard stop.

The stated reason is pretty straightforward: the BSP wants time to do a serious review of how it currently classifies and licenses payment operators. The framework, apparently, needs work. And rather than keep waving in new entrants while that review is underway, the central bank wants to pause the line entirely.

What the Freeze Actually Means

Applications that were already submitted before the suspension kicks in can still be evaluated — but don’t expect a final answer anytime soon. The BSP made clear that no approvals or denials will come through until the 12-month period ends. And any entity that needs OPS registration to operate legally? It can’t start without specific authorization. Full stop.

That’s a pretty significant brake on a market that’s been moving fast. Across Southeast Asia, digital payments and virtual asset adoption have grown sharply in recent years, and the Philippines has been one of the more active markets in the region. Crypto remittances, in particular, have become a real use case in a country where overseas worker flows drive a meaningful chunk of household income. Slowing the licensing pipeline now — even temporarily — sends a message.

The draft, if finalized, takes effect 15 days after publication. The BSP is still collecting feedback. No timeline was given for when the comment period closes or when a final version might land.

Tighter Rules for Virtual Asset Firms

The freeze on payment operators is only part of what’s in the draft. The BSP is also tightening how its supervised institutions can work with virtual asset service providers — VASPs, in the regulatory shorthand.

Under the proposal, any BSP-supervised institution offering merchant acquisition services would need to deal directly with regulated VASPs only. Not just any crypto firm. Regulated ones. Specifically, VASPs that are licensed, registered, or authorized by the BSP itself, the Philippine Securities and Exchange Commission, or another relevant authority. That’s a meaningful filter.

And those relationships wouldn’t be casual. The draft calls for enhanced due diligence, active monitoring, and hard limits on transaction and settlement sizes. Risk-based controls, basically — the kind of layered compliance framework that regulators elsewhere have been pushing for years.

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But the detail that probably raised the most eyebrows in the industry: the draft categorizes VASPs alongside gambling operators, gaming companies, adult-oriented businesses, and money service businesses. That’s a high-risk bucket. It’s the kind of classification that shapes everything downstream — from how banks treat crypto firms to what kind of scrutiny those firms face in practice. Being grouped with casinos and gaming platforms isn’t just symbolic. It has real compliance and banking access implications.

BSP’s Broader Oversight Push

It’s worth stepping back for a second. The BSP has been building out its VASP regulatory framework for several years now, and the Philippines was actually one of the earlier countries in Asia to formally license crypto exchanges. But the pace of market growth seems to have outrun some of the original framework’s assumptions. The draft circular reads like an attempt to catch up — to make sure the taxonomy still fits the actual landscape before more operators pile in.

There’s also a clear anti-financial crime angle here. Enhanced due diligence requirements and transaction limits are standard tools for reducing exposure to money laundering and other illicit flows. The BSP didn’t spell that out explicitly in the draft, but the architecture of the rules makes the concern obvious.

What’s less clear is how the industry will respond. Feedback is being solicited, and the BSP hasn’t specified exactly how long that window stays open. The central bank also didn’t respond to requests for further comment — so there’s a lot that’s still murky about timing and implementation.

Entities already in the application queue are probably the most anxious right now. They’re in a holding pattern, with no sense of when a decision might come. The BSP said those applications will be reviewed, but final decisions are on ice until the freeze lifts. That’s a tough spot for any firm that’s been waiting and planning around an expected approval.

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The draft circular also makes clear that any arrangements between BSP-supervised institutions and virtual asset firms need to be directly managed — no outsourcing the oversight. Every transaction, closely watched. Every settlement, within the limits the BSP sets.

Stakeholder input is described as crucial to finalizing the proposal. The BSP wants to hear from the industry before locking anything in. Whether that feedback loop meaningfully shifts the draft, or whether the broad strokes are basically settled, is unclear.

The 12-month freeze and the VASP reclassification are the two biggest pieces here. Both carry real consequences for how digital finance operates in the Philippines.