Philippines' largest crypto exchange, Coins.ph, is reportedly set to face regulatory action from the central bank

The exchange, which has more than 18 million customers, is reportedly handling trades for restricted gaming and gambling companies abroad.

Coins.ph, the largest cryptocurrency exchange in the Philippines, is facing punitive action from financial regulators at the country's central bank, two people familiar with the matter said.

The alleged violations, which include providing services to offshore gambling firms, are serious enough to have the 12-year-old firm's license revoked, causing an "earthquake" in the Philippines' crypto ecosystem, according to one of the people.

The exchange, which has more than 18 million customers, has a 24-hour cash trading volume of about $50 million and controls about 75-80 percent of peso-to-stablecoin liquidity in the Philippines, a key trade in the world's fourth-largest recipient of remittances.

According to the Commission on Overseas Filipinos, more than 10.8 million Filipinos live abroad, though most of them use banks and money transfer services to repatriate their earnings, which is about $43 billion a year.

Earlier this month, the Bangko Sentral ng Pilipinas (BSP) reportedly imposed restrictions on deposits to exchanges made through Coins.ph's parent wallet company, DCPay Philippines.

The restrictions follow the departure of several senior compliance staff, including chief compliance officer Lexi Herrera, head of anti-money laundering (AML) transaction monitoring, and Irish Calagui's money laundering reporting officer Chris Biano.

Neither Coins.ph nor the Central Bank of the Philippines responded to requests for comment by press time.

A little over a year ago, the central bank restricted the use of e-wallet applications for gambling purposes and required institutions under its supervision to cut off in-app access to gambling sites.

As a result, several gambling entities migrated to Coins.ph, according to the people. According to a third person familiar with the central bank's regulatory processes, the move had the added benefit of giving companies access to cryptocurrencies and stablecoins to pay overseas partners.

Coins.ph's recent ban was not time-limited, unlike temporary suspensions that are usually imposed on market participants for non-compliance with throughput or latency requirements. One of the people said that no reason was given in this case.

Coins.ph was one of the first cryptocurrency wallets and exchanges in the Philippines, and later expanded into offering financial services.

In January 2019, Indonesian technology company Gojek acquired Coins.ph for $95 million. Coins.ph was later sold to Wei Zhu, formerly Binance's CFO.

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