Remittances from overseas Filipino workers, which contributed US$33 billion to the country's US$400 billion GDP in 2017, are the backbone of the Philippine economy. Ironically, the country's financial literacy is low. The Bangko Sentral ng Pilipinas (BSP), the country's central bank and financial regulator, estimates that 10% of local government entities are still unbanked. Despite being the third-largest recipient of remittances, Philippine remittance expenses are high when compared to the global average of 7.4% for every US$200, according to the World Bank.

In this setting, cryptocurrency adoption has increased in the Philippines. However, the inherent volatility of a decentralized currency has raised fears that cryptocurrencies could be exploited to swindle financially uneducated Filipinos. As a result, Philippine regulators face a unique dilemma emerging from a conflict between providing access to financial services via cryptocurrencies on the one hand, and preventing the Philippines from becoming a hub of money laundering, terrorism financing, and cybercrime on the other. Despite the inherent problems in regulating cryptocurrencies, Philippine officials have taken steps to strike a compromise between these rules.

The Philippines had a high level of crypto awareness 74 percent. 53 percent of Filipinos indicated they would consider investing in cryptocurrencies in the future, while 39 percent of crypto owners said they would use their assets to make online purchases. In the Philippines, cryptocurrency ownership is highly common. People who live in metropolitan areas, wealthy professionals, and people who use the blockchain to send money are among the Filipinos who have resorted to cryptocurrencies rather than using the market for speculation. While remittances make for 10% of the country's GDP, about three-quarters of the population lacks a bank account. The usual transfer fees for bitcoin exchanges hover around 30-50 basis points, indicating that blockchain technology and cryptocurrencies have helped to bridge this gap.

The BSP has regulatory authority over the operations of finance businesses and non-bank financial organizations that perform quasi-banking tasks, such as remittance or transfer agents, money changers, and foreign exchange dealers, under the General Banking Law. The BSP has issued circular No. 994 (2017), or the Guidelines for Virtual Currency Exchanges, which will apply to virtual currency exchanges that also operate as remittance and transfer companies, money changers, or foreign exchange dealers, because these entities may function as virtual currency (VC) exchanges by converting or exchanging cryptocurrency to fiat currency (or vice versa). The term "virtual currency exchanges" refers to those that are covered by BSP circular No. 994.

The BSP circular No. 944 puts out a number of provisions that are now deemed included into the Manual of Regulations as section 4512N. Virtual currency exchanges must now be registered with the MORNBFI if they meet the standards for remittance and transfer organizations, money changers, or foreign exchange dealers. It also necessitates the payment of remittance agency registration and annual service fees. Virtual currency exchanges must also maintain risk management and security control mechanisms to manage technology risks associated with virtual currencies, such as an effective cybersecurity program (if the VC exchange offers wallet services for holding, storing, and transferring virtual currencies) and an internal control system appropriate to the nature, size, and complexity of their respective businesses. Notification and reporting obligations, similar to those imposed on remittance and transfer organizations, money changers, and foreign exchange dealers.

More crucially, once a payout exceeds PHP500,000 (about US$10,000) or its foreign currency equivalent, the MORNBFI requires VC exchanges to deal exclusively via direct check payments or direct credit to bank accounts. VC exchanges must also register with the Anti-Money Laundering Council, according to the MORNBFI (AMLC). Remittance and transfer companies, money changers, and foreign exchange dealers, for example, are covered institutions under the Anti-Money Laundering Act (AMLA), and are required to file reports for covered transactions (those involving a total amount exceeding PHP500,000 within one banking day) and suspicious transactions, as defined by the AMLA. The AMLA's know-your-customer and record-keeping obligations apply to VC exchanges as well. As of the time of writing, BSP circular No. 944 is the only national application legislation that directly addresses cryptocurrency.