THE Bangko Sentral ng Pilipinas (BSP) warned the public of “Bitcoins,” or virtual currencies currently being exchanged in the country, saying monetary authorities were still studying the “appropriate regulatory measure” on the new technological innovation.
The central bank said Bitcoins were a form of unregulated digital money that allows purchase of both virtual goods, such as those in online gaming environments and social network, as well as real goods and services, such as retailers, restaurants and other establishments. This type of currency is not issued by a central bank. Also, unlike electronic money that is backed by cash for the entirety of its value, Bitcoins are not backed by any commodity but by the mere ability of its holder to exchange them for goods.
“It has recently come to the attention of the BSP that virtual currencies like Bitcoins are now being exchanged in the Philippines. This is the reason we put out an advisory just this week to warn the public that in the Philippines these [and other virtual currencies] are still unregulated,” BSP Governor Amando M. Tetangco Jr. said in his e-mailed response to reporters.
In the public advisory issued by the central bank, the central monetary institution in the country said it will be “closely monitoring developments” on these virtual currencies and urged the people to “familiarize themselves” with information on the subject. “As we understand it, there still isn’t global agreement on how to handle this new technological innovation,” Tetangco said.
He also told reporters that those who engage in virtual currency exchange could “lose their money” through a number of ways.
“Some of these include outright fraud, system failure as trading would be exchange platform-dependent. There have been a number of cases reported where the trading platforms have gone out of business or failed or through the users’ own mistakes when the virtual currencies are ‘stolen’ from the users’ ‘digital wallet,’” Tetangco said.
Although the innovation still has its loopholes for fraud, Tetangco also said it could be used for future low-cost remittance solution.
“We are trying to better understand the intricacies of its use and implications on consumer protection. This innovation could possibly offer a low-cost remittance solution, but we would need to have some level of confidence that the weaknesses could be addressed,” Tetangco said.