Philippine Central Bank (Bangko Sentral ng Pilipinas or BSP) personnel urged caution regarding the use of cryptocurrencies this week and promised to continue to address the risks posed by them, The Philippine Star reports.
Governor Benjamin Diokno said he is wary of cryptocurrencies given that they can be used to fund terrorism.
“I think that is my view. So we will go easy on that,” he said.
Diokno’s colleague expressed similar misgivings while attending a recent book launch about Bitcoins.
According to the outlet, BSP Deputy Governor Diwa Guinigundo said he doubted whether Bitcoins can ever stand in for regular cash as a unit of account, medium of exchange, or store of value.
“Bitcoins are limited in use at this points, value is very volatile,” he said.
Guinigundo said blockchain and distributed ledger technology enable peer-to-peer transacting and the bypassing of banks and regulated financial channels.
If a parallel cryptographic money system develops, said Guinigundo, in a time of crisis, cryptocurrencies could undermine the financial order:
“For this reason, game theory dictates possible dysfunction when there is market breakdown, when everyone may distrust one another. There cannot be a total disregard for a central bank or a third party that provides lender of last resort facility.”
He said his office is addressing new financial technology through its sandbox, a program that allows it to balance innovation with consumer protection.
Data from the BSP’s Technology Risk and Innovation Supervision Department indicates that the use of cryptocurrencies in the Philippines more than doubled in 2018 to $390.37 million (up from $189.18 million in 2017).
Of those transactions, $208.27 million involved conversions from pesos and other currencies to cryptocurrencies; $173.33 million involved conversions of cryptocurrencies to pesos and other currencies; and $8.77 million involved international inbound remittances transmitted via cryptocurrencies.
According to The Philippine Star, in response to the rising popularity of cryptocurrencies in the Philippines, financial regulators created and distributed formal rules governing cryptocurrency exchanges in February 2017 (“Circular 944”).
Circular 944 requires all cryptocurrency exchanges to register with BSP as remittance and transfer companies and compels them to implement safeguards to mitigate risks, including anti-money laundering/ anti-terrorist financing controls, “technology risk management systems,” and consumer protection controls.
10 virtual currency exchanges in the Philippines have been approved by the BSP thus far:
- Bexpress Inc.
- Coinville Phils. Inc.
- ABA Global Phils. Inc.
- Betur Inc. (Coins.ph)
- Rebittance Inc.
- BloomSolutions Inc.
- Virtual Currency Philippines Inc.
- ETranss Remittance International Corp.
- Fyntegrate Inc.
- ZyBi Tech Inc.