Concerns About Cryptocurrencies
Benjamin Diokno, the head of the Bangko Sentral ng Pilipinas (BSP), has raised red flags over the potential misuse of cryptocurrencies, particularly in terrorism financing. His assertion comes amid growing interest in the crypto market within the Philippines and is part of the BSP’s strategy to keep a vigilant eye on the evolving landscape.
Bitcoin: A Volatile Investment
During a recent event, Diokno expressed skepticism about Bitcoin’s capabilities. He pointed out that Bitcoin struggles to meet its roles as a unit of account, a medium for exchange, and a store of value due to its notorious volatility. If you ever thought of Bitcoin as a reliable currency, you might want to rethink that on a particularly bad day in the market!
The Promise of Blockchain
Interestingly, amidst the criticisms, Diokno acknowledged that blockchain technology does hold promise. Specifically, it could enhance peer-to-peer transactions, but the governor warned that this advancement might undermine traditional banking. He stated, “Game theory dictates possible dysfunction when there is market breakdown… There cannot be a total disregard for a central bank or a third party that provides lender of last resort facility.” It seems the traditional banks might need to up their game!
Regulatory Sandbox Approach
BSP Deputy Governor Diwa Guinigundo echoed the need for a balanced approach. He articulated the implementation of regulatory sandboxes, allowing for innovation in fintech while still safeguarding consumers. This approach aims to coax the benefits of innovative technology while keeping pesky market risks at bay. It’s like trying to bake a cake and keeping all the ingredients perfectly measured.
Statistics That Speak Volumes
According to fresh data from the BSP’s Technology Risk and Innovation Supervision Department, cryptocurrency transactions in 2018 surged nearly double from the previous year. The figures clocked in at $390.37 million — not too shabby! Here’s the breakdown:
- Fiat to crypto conversions: $208.27 million
- Crypto to fiat conversions: $173.33 million
- Crypto-powered international remittances: $8.77 million
Future of Crypto Regulations in the Philippines
This February, the Philippines rolled out new regulations governing the issuance and acquisition of utility and security tokens. In a bid to shield consumers, the BSP made it a requirement that domestic crypto exchanges register as remittance and transfer firms, adhering to anti-money laundering (AML) and consumer protection measures. Looks like those crypto exchanges will need to put on their best behavior!
In the midst of all this regulation, it’s also worth noting that BitMEX Ventures recently invested in a BSP-licensed crypto exchange, while Bitspark announced its plans to launch a cryptocurrency pegged to the peso. Perhaps there’s hope for a stable crypto yet!
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