says that crypto needs an ‘enabling environment’
The Philippines’ central bank is looking for ways to protect investors in light of rising crypto adoption.
Bangko Sentral ng Pilipinas, the Philippine central bank, wants to promote crypto education because it sees a lot benefits associated with crypto.
The BSP stated that virtual assets are the BSP’s main focus. “Virtual assets have the potential to improve the delivery and cost effectiveness of financial services, especially payments and remittances services. It has the potential to offer faster and more economical transfers of funds for both domestic and international settings.”
According to the BSP crypto adoption has increased in the Philippines over the past years because of the COVID-19 pandemic. In July 2021, Bitcoin ( BitcoinTC), trading volumes in the Philippines reached new heights via some peer-to–peer crypto exchanges.
The BSP stated that “we have seen consumers’ willingness to explore the virtual realm during the pandemic,” and specifically online platforms that promise income-generating opportunities, or play-to earn applications.”
The Philippine central bank has no plans to place any restrictions on trading or investments in crypto currencies due to growing adoption. Stati: Instead, the BSP will implement a regulatory approach that aims to create an “enabling environment” by implementing “risk-based, proportionate regulations.”
“The BSP will continue enhancing and expanding our financial consumer awareness campaigns specifically designed for education relevant stakeholders about virtual assets as to both the benefits and the risks involved.”
The BSP is not supportive of crypto being used as a method to pay for goods and services, despite its efforts to create an “enabling environment” for it. The bank stated that virtual assets, especially cryptocurrencies, whose value is derived based upon the agreement of the community, are not intended to be legal tender.
According to the BSP, cryptocurrency cannot be used as a payment method due to high volatility and the potential for illegal use or theft due increased anonymity, weak cyber and digital identity security protocols, and crypto transaction irreversibility. This means that no central authority could cancel or restore a Bitcoin transaction.
BSP pointed out that cryptocurrencies are considered virtual currencies by the regulator. The BSP stated that virtual assets are subject to price volatility and the risk of losing their investments, as speculation drives most of the virtual asset prices. In response to this concern, the central bank issued guidelines to virtual asset service providers in Circular No. 1108 in January 2021
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BSP sees many opportunities to use blockchain technology to improve the security and efficiency in financial services in the Philippines. The central bank is currently investigating the possibility of issuing a central banks digital currency.
BSP is considering Project CBDCPh as a pilot project to enable inter-institutional funds transfers using a wholesale CBDC platform. According to the bank, the retail CBDC is not very relevant for the country in this short term.