Lawmaker warns Filipino investors about 'extremely risky' bitcoins

Manila, Philippines — A lawmaker on Wednesday warned Filipino investors from temptation of buying bitcoins, saying such a type of digital currency are “extremely risky investments.”

“Cryptocurrencies like bitcoin are a promising low-cost remittance platform for Filipino workers sending their earnings home but they are extremely risky investments due to lack of regulatory protections for consumers,” Eastern Samar Rep. Ben Evardone said in a statement.

Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. People could buy and sell bitcoins by tapping dealers or brokers or going to bitcoin exchanges.

Holders could also look for services or goods whose merchants accept bitcoin payments.

Bitcoins and other electronic currencies are not backed by a bank, any existing currency unit in circulation, or any asset of tangible value that offer some degree of security for its buyers, Evardone said.

Citing the opposition of officials from the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, and members of the banking community against cryptocurrency, Evardone—who chairs the committee on banks and financial intermediaries—also said bitcoins are prone to hacking due to absence of safeguards.

“Until enough safeguards are put in place, investors would be well-advised to heed the admonitions of the Bangko Sentral and the Securities and Exchange Commission to put their money in safer investments,” the lawmaker said.

Latest data showed the volume of bitcoin transactions in the country has more than tripled to $6.98 million per month last year from $2.09 million in 2015.

Last August, the BSP approved the registration of two companies to engage in the operation of bitcoin exchanges as part of efforts to regulate the fast growing but potentially risky virtual currency industry.

It had also issued a circular laying down the guidelines for virtual currency exchanges.

Bitcoin was once considered as a revolutionary currency system that could potentially change global finance. But cyberattacks in the past had dented the currency's image.

In 2014, Tokyo-based Mt. Gox, then the largest bitcoin exchange in the world, collapsed following a massive loss of the virtual currency involving 750,000 bitcoins from users and 100,000 of the company's own bitcoins.

This month, the company behind cryptocurrency tether issued a “critical announcement” reporting a $31 million theft.