With the increasing crypto adoption in the Philippines, the central bank of the country has been devising programs to ensure investors’ protection through crypto awareness.
The central bank of the country, Bangko Sentral ng Pilipinas (BSP), has been pushing to promote education on cryptocurrencies considering the huge benefits associated with blockchain technology and the crypto space.
In an interview with Cointelegraph, a crypto news outlet, a BSP representative mentioned that the central bank is looking to leverage the capacity of cryptocurrencies to improve its financial industry, especially in remittances and payment services. Cryptocurrencies have the potential to provide a cheaper and faster option for fund transfer.
Crypto Adoption in the Philippines
A report from BSP showed that crypto adoption in the country increased due to the global pandemic, and since the trading volumes of Bitcoin and other crypto assets have been hitting new highs.
In response to the increasing adoption, the BSP representative said there is no plan to limit crypto trading or investments, but rather to implement a regulatory framework that provides a more enabling environment.
However, even though the BSP is focusing on creating an enabling environment, the central bank has a negative perspective on the usage of cryptocurrencies as a method of payment. As noted by the bank, the value of crypto assets is gotten from the agreement of users in the community and thus, lacked the intrinsic value to be used as legal tender.
Also, cryptocurrencies cannot be used for payments because of the risks involved like uncontrolled volatility, potential use for illicit and unlawful acts, and fraud due to extreme anonymity and poor digital security protocols. Apart from the risks mentioned earlier, another risk is the irreversibility of crypto transactions, which would imply that no central authorities can restore funds or cancel transactions.
In addition to the risks, the Philippines central bank said that regulators in the country considered cryptocurrencies not as currencies but as virtual assets. The BSP added that users can experience losses in the crypto market since the prices are mostly driven by speculations. As a way to address that, the BSP issued a guideline for all companies providing services around virtual assets, which is part of the Circular No. 1108 released in January 2021.
Amid all listed, the BSP still considers using blockchain technology to improve efficiency and security in the financial industry in the Philippines. Currently, the central bank is looking to issue its own Central Bank Digital Currency.
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