The Bangko Sentral ng Pilipinas (BSP) does not consider Axie Infinity to be a virtual asset service provider (VASP), and the central bank is considering designating the game as an Operator of Payment System (OPS), similar to GCash, PayMaya, and other banks.
Having stated that, the BSP closely monitors Axie Infinity, how players utilize and exchange Smooth Love Potion (SLP) tokens or digital assets as a means of payment, and the size of its merchant network.
“However, we are also actively monitoring the level of merchant acceptance of SLP as a means of payment for goods/services, which may come within the operations of an OPS,” the central bank said, according to a Manila Bulletin story.
Sky Mavis, a technology-focused gaming studio launched in early 2018, is behind Axie Infinity. It is considered an NFT game since it allows players to earn currency by breeding, raising, battling, and trading Axie animals in the marketplace.
VASPs are subject to the BSP’s authority over cryptocurrency-related activity. On the other hand, the BSP stated that Axie Infinity “is not considered a VASP.”
The BSP’s legal framework for VASPs enables end-users to convert fiat currency to crypto-assets to obtain NFTs for game applications and then convert the same back into fiat currency.
BSP Circular No. 1108, or the Guidelines for VASPs, issued in January 2021, recognizes the emerging virtual asset systems or markets, as well as the dangers associated with their anonymity, price volatility, and transaction “velocity.” Once fiat money is swapped or converted into virtual assets, it is easily transferable and usable for payment, which is why VASPs are classified as money service businesses and are regulated by the BSP, according to the Manila Bulletin.
According to the central bank, Axie Infinity is not a VASP since the scope of BSP Circular No. 1108 “excludes digital units of exchange utilized as in-game tokens, such as the implementation of SLP within Axie Infinity.”
Furthermore, the central bank keeps track of how blockchain gaming app participants utilize non-fungible tokens (NFTs) to purchase goods and services that may fall under the purview of an OPS.
BSP’s continued surveillance is to determine whether Axie Infinity operations could be classified as OPS.
OPS is defined as cash-in service providers, bill payment service providers, and businesses such as payment gateways, platform providers, payment facilitators, and merchant acquirers that enable sellers of goods and services to accept cash or digital payments under BSP laws.
As an OPS, it is required to register with the BSP in accordance with Circular No. 1049, which lays out the rules for OPS registration.
Furthermore, once the BSP determines that Axie Infinity players utilize and exchange Smooth Love Potion (SLP) tokens or cryptocurrency assets as a form of payment for goods, it will ask Sky Mavis or its local partner to register with the BSP as an OPS; otherwise, it should cease operations.
Lyka was a popular platform that served as an OPS. On the other hand, the BSP ordered it to cease operations as an (OPS) and encouraged it to seek registration first before continuing with its activities.
Source: Manila Bulletin