BSP warns anew of risks in buying, owning, trading virtual currencies

The Bangko Sentral ng Pilipinas (BSP) recognizes the potential benefits of virtual currencies, but is equally aware of the potential risks to be used in illicit activities such as money laundering and terrorist financing.

In reiterating its warning against virtual currencies (VCs) over the weekend, the central bank noted that unlike stocks or debt issues, VCs are not backed by any company or commodity and the price is purely dependent on market demand and supply.

“Virtual currencies (VCs) are seemingly gaining momentum in terms of usage as a medium for payment and remittances in the country. This is largely attributed to their ability to facilitate the movement of funds at a much faster, cheaper, and convenient way,” it said.

“As such, investing in VCs presents a highly speculative and risky undertaking which might result into huge financial losses,” the BSP said.

“The public is therefore advised to exercise caution regarding the acquisition, possession, trading of VCs or dealing with VC-related offers,” it added.

The statement comes on the heels of the recent price surge of VCs such as bitcoin, which the BSP said may cause individuals or entities to be tempted to invest in pyramid schemes disguised as initial coin offerings (ICOs).

“We’re already regulating those who engage in the business of exchanging bitcoins and other cryptocurrencies for money to prevent their use for illegal purposes,” BSP Governor Nestor Espenilla told GMA News Online.

“Before that, we have issued general warning to public about the hazards. And we keep repeating,” he said.

Espenilla emphasized that the public must exercise caution when dealing in VCs, saying the BSP is not endorsing cryptocurrencies as legal tender to pay for goods and services.

“People should also exercise good judgment and be responsible for their own decisions,” the central bank chief noted.

Last December 18, CME Group Inc.—the world’s largest derivatives exchange operator—began trading bitcoin futures which opened at $20,650 or P1.031 billion at the exchange rate of P49.930:$1.

It then fell to as low as $11,159 or P557,168.87 on the Luxembourg-based Bitstamp exchange later that week, before rising back to $15,049.

In the Philippines, BSP data showed that bitcoin transactions totaled $8.8 million a month on average in January to June 2017.

Current guidelines of the central bank only regulate virtual currency exchanges or the conversion or exchange of government-issued currencies into a virtual currency.

It has so far authorized two virtual currency exchanges in the Philippines—Betur or coins.ph, and Rebittance.

The BSP has issued a list of security considerations for those who intend to deal in VCs:

• Set-up and use a dedicated email account solely for VCs. Avoid using the same email accounts or usernames on other public platforms such as social media.

• Keep your VC-related email account to yourself. It is important to secure your account details, as users need their email account and password for each VC transaction.

• Set a strong password—complex and hard-to-guess (i.e. alphanumeric including symbols, lower and upper cases). Avoid re-using the same password for more than one service.

• Observe basic internet security. Exercise caution in accessing your VC wallet, especially when using Wi-Fi connections and avoid installing software, browser plug-ins or downloading attachments from unknown or suspicious websites and emails. Do not leave your device unattended.

• Subscribe to multifactor authentication (MFA) provided by the VC wallet provider, as adding another layer of authentication may provide increased security.

• Separate your funds and use cold storage. VC funds should be separated into two or more digital wallets for transactional purposes with the main wallet kept offline to minimize vulnerability to theft, hacking or fraud.

The BSP earlier said it was studying the possibility of regulating bitcoins should the VC be used for investments. — VDS, GMA News