BSP says Axie Infinity operator not registered, SLP transactions being ‘actively monitored’

Sky Mavis, which operates Axie Infinity, is not registered with the Bangko Sentral ng Pilipinas (BSP), even as transactions within the platform may fall under activities of operators of payment systems (OPS) which are regulated by the central bank.

Axie Infinity has been gaining traction due to its play-to-earn scheme, where players breed, battle, and trade digital pets called Axies. Small Love Potions (SLPs) are then awarded to successful challengers, which users can either cash out or use to breed new Axies.

Users of the platform can also gain Axie Infinity Shards (AXS).

“Sky Mavis, the developer of the online game Axie Infinity, is not licensed/registered with the Bangko Sentral ng Pilipinas,” the BSP said in an email interview.

According to the BSP, digital units of exchange used as in-game tokens such as the SLPs, are excluded from its scope under the Guidelines for Virtual Asset Service Providers and regulatory focus is on the exchange of fiat money to virtual assets.

“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 Operator of Payment System,” the BSP said.

The central bank did not elaborate on the monitoring efforts being conducted, and if the firm qualifies as an OPS.

The BSP defines an OPS as any person or business organization who provides clearing or settlement services in a payment system, or defines, prescribes, controls, or maintains the  operational framework of the system.

Under the National Payment Systems Act (NPSA), the BSP is given oversight authority over all payment systems in the Philippines, with supervisory and regulatory powers.

Moving forward, the BSP cautioned the public on dealing with virtual assets (VAs) such as non-fungible tokens, with an increasing number of individuals and institutions riding the digital wave.

“The price volatility associated with VAs presents enormous risks which might result in financial loss. If you plan to engage in these play-to-earn online games, make sure that you are knowledgeable in the basics of how the game works and more importantly, how to secure your money,” it said.

“Lastly, the public should be wary of the accompanying challenges in enforcing legal recourse against companies registered and operating outside the country,” it added.

For its part, the Securities and Exchange Commission (SEC) said it continues to “closely study” the mechanics of Axie Infinity.

“My understanding is that it is being operated online by a Vietnamese company with no physical presence in the Philippines,” Commissioner Ephyro Luis Amatong said in a separate mobile message.

“Because there is some element of exchange of fiat currency for blockchain ‘crypto’ or digital assets and vice-versa, this may be something of concern for the BSP,” he added.

The Bureau of Internal Revenue (BIR) earlier said income from Axie Infinity are subject to income taxes, except for yearly incomes that do not exceed P250,000.—AOL, GMA News