The Philippines has seen a growth in the use of cryptocurrency lately and the chief of the Philippines central bank has warned citizens about its risks. While cryptos and blockchain can be useful for settlement, they effectively allow users to sidestep the banking system.
On 10th June 2019; Benjamin Diokno, Governor of the Bangko Sentral ng Pilipinas, stated that his institution would continue to monitor and address the use of cryptocurrencies, especially given the technology’s privacy benefits that could potentially be used in the funding of terrorism. The central bank’s deputy governor, Diwa Guinigundo, also spoke of cryptocurrency’s limitations when compared with fiat money, stating that it’s more of a medium of exchange than something with actual value. ” The central bank prefers to use regulatory sandboxes to keep oversight of such new technologies, In order to balance encouraging innovation with risk mitigation”, Guinigundo said.
The virtual currency transactions in the Southeast Asian nation has almost doubled from $189.18 million in 2017 to $390.37 million last year, based on data compiled by the central bank’s Technology Risk and Innovation Supervision Department. As a result, the central bank in February 2017, issued a circular mandating cryptocurrency exchanges to register with the central bank as remittance and transfer companies, and further required these firms to set up safeguards to ensure consumer protection and counter illicit transactions such as money laundering and terrorist financing and 10 exchanges in the Philippines have been registered with the central bank till date.
The central bank already stated that it doesn’t intend to endorse any cryptocurrency, as it is neither issued or guaranteed by a central bank or backed by a commodity. Despite this, the institution hopes to regulate the technology when used for delivery of financial services, particularly for payments and remittances, to ensure consumer protection and financial stability.