Amid growing cryptocurrency adoption in the Philippines, the country’s central bank is seeking measures to better protect investors through local cryptocurrency awareness.
The Philippine Central Bank, Bangko Sentral ng Pilipinas (BSP), wants to promote education about digital assets as he sees many benefits associated with cryptocurrencies and Blockchain technology, a BSP representative said in an interview with Cointelegraph.
“The BSP focuses on the ability of virtual assets to improve the provision of financial services, in particular payment and remittance services, as they have the potential to provide faster and cheaper transfer of funds, both domestically and internationally. international”, stated the BSP spokesman.
According to the BSP, the adoption of cryptocurrencies in the Philippines has increased in recent years due to the COVID-19 pandemic. As a result, Bitcoin (BTC) trading volumes in the Philippines hit new highs on some peer-to-peer crypto exchanges in July 2021.
“During the pandemic, we’ve seen consumers’ willingness to explore the virtual space, particularly online platforms that promise to offer revenue-generating opportunities or play-to-earn apps,” the BSP executive said.
In response to growing adoption, the Philippine central bank does not plan to adopt any significant limits on cryptocurrency investments or trading at present. Instead, the BSP is seeking to implement a regulatory approach aimed at providing an “enabling environment” through “risk-based and proportionate regulations,” the central bank representative said, adding:
“The BSP will continue to enhance and expand our financial consumer awareness campaigns designed specifically to educate relevant stakeholders about virtual assets, both in terms of the benefits and risks involved.”
Despite the fact that its goal is to create an “enabling environment” for cryptocurrencies, the BSP maintains a very negative stance on the use of cryptocurrencies as a payment method. “Virtual assets, in particular cryptocurrencies, whose values are derived from user community agreements, are not inherently designed to serve as legal tender,” the representative of the BSP pointed out.
According to the BSP, cryptocurrencies cannot serve as a means of payment due to risks such as high volatility and a high potential for illicit use or theft due to greater anonymity and “weak cyber and digital identity security protocols.” Among other risks, the bank mentioned the irreversibility of cryptocurrency transactions, meaning that no central authority would be able to cancel a Bitcoin transaction or recover those funds.
The BSP also noted that the regulator considers cryptocurrencies to be virtual assets and not a currency. “Since the price of most virtual assets is driven by speculation, virtual assets expose users to price volatility and risk of loss,” the BSP noted. To address this, the central bank issued guidelines for virtual asset service providers as part of Circular No. 1108 in January 2021.
The BSP continues to see great opportunities in utilizing Blockchain technology to improve the safety and efficiency of financial services in the Philippines. The central bank is currently exploring the issuance of a central bank digital currency (CBDC).
The BSP plans to undertake the CBDCPh Project, a pilot project that will enable inter-agency fund transfers using a platform for a wholesale CBDC. According to the bank, a retail CBDC is not very relevant for the country in the short term.
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