The hot play-to-earn token game Axie Infinity is under increased scrutiny from Philippines tax authorities. The country’s central bank said it is closely monitoring how players use game tokens to decide whether to classify and regulate Axie’s parent company as an entity that runs payment systems.
Fast facts
- The central bank, Bangko Sentral ng Pilipinas, said it would consider the Vietnamese company running Axie Infinity, Sky Mavis, as “operators of payment systems” (OPS）rather than a “virtual asset service provider (VASP)”. In the Philippines’ regulation scope of VASPs, the cryptocurrencies and tokens used to purchase virtual services in online games are not recognized as “virtual assets.”
- One of the characteristics of companies that could be recognized as an OPS is that they operate systems that enable fund transfers or payments.
- If the central bank determines Axie Infinity players use game tokens or AXS tokens as a payment method for a purchase, it could require the parent company to register with the central bank as an OPS. If the company is determined to be an OPS and refuses to register, it risks being shut down.
- Axie Infinity allows players to earn in-game cryptocurrency, which can then be traded and exchanged for pesos. Under the game’s rules, people buy and nurture their NFT pets “axie” through the in-game token “Smooth Love Portion (SLP), and players get more SLP through battling and finishing game tasks. SLP can be exchanged for Axie Infinity’s governance token AXS, further connected to real-world fiat.
- Over 40% of Axie players are from the Philippines. The game has been reported to be a source of financial support for some Filipinos during the pandemic. Some players said that the game can bring US$300 per month, nearly double the minimum wage of US$170 in the Philippines.
- Last week, the Phillipines Deputy Finance Minister Antonette C. Tionko stated that local taxes should cover Sky Mavis’ income from the Philippines. Axie has tweeted that it is willing to cooperate with the government’s supervision.