The Bangko Sentral ng Pilipinas (BSP) does not consider Axie Infinity as a virtual asset service provider (VASP), and the central bank is looking into classifying the game as an Operator of Payment System (OPS) like GCash and PayMaya.
With that said, the BSP is actively monitoring Axie Infinity, how players use and exchange tokens or cryptocurrency assets known as Smooth Love Potion (SLP) as a form of payment, and the extent of its merchant network.
“However, we’re also actively monitoring the level of merchant acceptance of SLP as a form of payment for goods/services, which may fall within the activities of an OPS,” said the central bank, in a report by Manila Bulletin.
Axie Infinity is developed by Sky Mavis, a technology-focused game studio founded in early 2018. It is classified as an NFT game that allows individuals to earn currency from playing the game as they breed, raise, battle, and trade Axie creatures in the marketplace.
The BSP’s jurisdiction over cryptocurrency-related activities covers VASPs. However, the BSP said Axie Infinity “is not considered as VASP.”
The BSP’s regulatory framework for VASPs allows end-users to exchange fiat currency to crypto-assets to acquire NFTs for game applications and to convert the same back into fiat currency.
BSP Circular No. 1108, or the Guidelines for VASPs issued in January 2021, recognizes the evolving virtual asset systems or markets and their attendant risks due to their anonymity, volatility of prices, and “velocity” of transactions. Once fiat money is exchanged or converted into virtual assets, it is easily transferrable and used for payment, which is why VASPs are considered as money service businesses and under BSP regulation, Manila Bulletin reported.
The central bank, however, said that Axie Infinity is not a VASP as the scope of BSP Circular No. 1108 “excludes digital units of exchange used as in-game tokens, such as the implementation of SLP within Axie Infinity.”
Moreover, the central bank monitors how the blockchain gaming app participants use non-fungible tokens (NFTs) to pay for goods and services, which may fall within the activities of an OPS.
Under BSP regulations, OPS includes cash-in service providers, bills payment service providers, and entities such as payment gateways, platform providers, payment facilitators, and merchant acquirers that enable sellers of goods and services to accept payments in cash or digital form.
BSP’s ongoing monitoring targets to find out if Axie Infinity activities could be considered as OPS. As an OPS, it is required to register with the BSP based on Circular No. 1049, providing the rules for the registration of OPS.
Further, once the central bank has determined that Axie Infinity players use and exchange tokens or cryptocurrency assets known as Smooth Love Potion (SLP) as a form of payment for purchases, it will require Vietnam-based Sky Mavis or its local partner to register with the BSP as an OPS; otherwise, it should stop operating.
Lyka to and urged to apply for registration first before continuing with its activities.