The Philippines Central Bank Calls for Increased Crypto Awareness
- The Philippines Central Bank sees cryptocurrency as virtual assets instead of a currency.
- The bank regulator believes cryptocurrencies can improve financial services in its region.
Cryptocurrency has thrived in the Philippines since the pandemic in 2020. Still, authorities are concerned about its risks and are working towards protective measures for investors by increasing local awareness. The Bangko Sentral ng Pilipinas, which is the Philippine central bank, intends to boost local crypto education as it believes blockchain and cryptocurrencies can play a role in its region.
In an interview with Cointelegraph, a bank representative confirmed the institution’s plans to focus on virtual assets and its ability to improve the delivery of financial services. The central bank believes cryptocurrencies can change the payment and remittance system in the country, but it is concerned by some possible pitfalls.
Cryptocurrencies can be used to transfer funds both locally and internationally, and most countries are leveraging this potential. Crypto transactions are faster and cheaper than regular bank transfers, but they are yet to be recognized by authorities.
The use of cryptocurrencies for financial purposes in the Philippines surged during the lockdown of 2020. Many locals lost their jobs during the pandemic, and to survive, they turned to the crypto industry to find ways to earn. Play-to-Earn games such as Axie Infinity became a hot trend in the country as they offered players the chance to earn from playing.
Rather than impose a cryptocurrency investment limit, the Philippine central bank intends to create a secure environment through regulations and policies that guarantee investors’ protection. According to the institution’s representative,
The BSP will continue to enhance and expand our financial consumer awareness campaigns specifically designed to educate relevant stakeholders on virtual assets, both as to advantages and the risks involved
The BSP has an extremely negative opinion on using cryptocurrency as a payment method, despite aiming to create a supportive framework for it. The bank noted that virtual assets, notably cryptocurrencies, are not organically meant to serve as legal tender. Instead, it believes that the values of cryptocurrencies are derived from the agreement of the user community.
The BSP claims that risks like significant volatility, a strong potential for fraudulent use, and cyber-attacks make cryptocurrencies a poor option as a means of payment. The financial regulator believes cryptocurrencies have the potential to fund crimes such as money laundering, drugs, and in extreme cases, terrorism. The BSP further cited the irreversibility of crypto transactions as one of the concerns of approving crypto as a payment option.
The nature of blockchain technology means no central authority can reverse or cancel a bitcoin transaction. This feature, coupled with the anonymity of crypto transactions, gives fraudsters the cover needed to exploit vulnerable protocols or individuals.
The BSP further emphasized that rather than treating cryptocurrencies as currency, the central bank views them as virtual assets. According to the regulator, the volatility of cryptocurrencies means they are subject to frequent losses.
Regardless of its views about cryptocurrencies, the BSP intends to use them to promote and secure financial services in the country. The Philippines is one of the many countries considering launching a central bank digital currency (CBDC.). More news on this will emerge in the coming months.