BSP closely monitoring virtual currency trades

As Bitcoin hits record high

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is closely monitoring virtual currency exchanges (VCEs) amid rising complaints from investors unable to access their accounts at the Philippine Digital Asset Exchange (PDAX) as the price of Bitcoin continued to hit new highs.

BSP Deputy Governor Chuchi Fonacier said the PDAX has submitted the required report on the incident after it suffered a major outage early this week.

“We’re closely monitoring,” Fonacier told The STAR.

The trading platform of PDAX suffered a major outage as the price of Bitcoin continues to hit new all-time highs, jumping past $52,000 for the first time.

An incident early this week prompted PDAX to go on maintenance mode after a seller reportedly erroneously uploaded 316,000 Bitcoins at P300,000 each instead of the P2.3 million price at that time.

It was not clear whether investors were able to transact successfully at the price of P300,000.

In October 2018, the BSP issued Circular 1019 tightening the reporting regime of BSP-supervised financial institutions (BSFIs) with respect to cyber-related incidents and operational disruptions through the establishment of the Technology and Cyber-Risk Reporting and Notification Requirements.

The BSP imposed faster reporting timelines as the period was reduced to two hours from the discovery of the incident instead of 10 calendar days to further enhance the industry’s situational awareness and cyber resilience.

The circular provides procedures for reporting to the BSP major cyber-related incidents, such as those involving significant data loss or massive data breach and disruptions of financial services and operations.

PDAX founder and chief executive officer Nichel Gaba earlier said the exchange saw an increase in activity both from new and existing customers resulting in an “unprecedented levels of trading and volatility.

This, Gaba said, prompted PDAX to extend the period of system maintenance to ensure the sound performance of the exchange.

“Before anything else, we wish to assure you that your assets are safe, and we expect to re-activate both the exchange and the mobile app very soon,” Gaba said.

PDAX said account creation and verification, viewing of portfolio holdings, payment in and out of peso as well as placing limit orders and market orders were fully operational Wednesday evening, while the PDAX mobile app was also supposed to be operational.

However, PDAX said it is still enabling the payment in and out of digital assets.

Mark Angelo dela Cruz, an investor, said in a letter to the BSP a lot of users have been disallowed accessing their portfolios.

“This has cost us a lot of trading opportunities, hence, lost earnings,” dela Cruz said.

Dela Cruz said hundreds of users remain affected by the outage and a sign up of affected users have started so authorities could give the incident proper attention.

Meanwhile, the BSP issued Memorandum 2021 – 031 on the re-registration of VCEs as virtual asset service providers (VASPs).

The regulator reminded BSP-supervised financial institutions that VASPs should be licensed in the country where they were created or in the jurisdiction where their business is located as mandated by Paris-based Financial Action Task Force (FATF).

The major players were also required to identify specific gaps vis-à-vis the regulatory requirements under Circular 1108.