Insurance body warns public vs cryptocurrency

MANILA, Philippines — The Insurance Commission (IC) has warned the public and its regulated entities against cryptocurrencies, citing the risks involved in using these digital assets.

In an advisory posted in the IC website, commissioner Dennis Funa said the public should be prudent when dealing with cryptocurrencies as these can be used in many illegal activities and are not suitable investment instruments.

“While recognizing the value of technological advancement on the use of cryptocurrencies, the IC likewise recognizes the corresponding risks involved in (their use),” Funa said.

“The apparent increase in the demand for cryptocurrencies and their popularity in terms of usage as a medium for payment and remittances worldwide makes (them) prone to being used for facilitating illegal activities, such as scams, money laundering, and terrorism financing,” he added.

“Thus, the public is being cautioned to act prudently whenever dealing in the acquisition, possession, and/or trading of cryptocurrencies,” Funa concluded.

Considering that cryptocurrencies are neither issued nor guaranteed by any government, Funa said their value is dependent on market demand and supply, which makes them highly speculative and not suitable for investment.   

“Individuals with dealings on cryptocurrencies are highly encouraged to educate themselves on the matter and be updated on the various rules and regulations issued by different government agencies, such as the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC),” Funa said.

The insurance chief cited BSP Circular 944 issued in February last year, which requires any entity that offers services or engages in activities that provide facility for the conversion or exchange of fiat of currency to virtual currencies, or vice versa, to register with the BSP as a remittance and transfer company.

“Notwithstanding this regulation, the BSP does not, in any way endorse virtual currencies as legal tender, store of value or an investment vehicle,” Funa clarified.

The SEC, for its part, has also warned the public against internet-based bitcoin and cryptocurrency schemes. The regulator said these schemes are now becoming rampant, listing 14 entities engaged in such activities.

Despite the caution, Funa said the IC will “keep an open mind” to the potential of cryptocurrencies in its regulated industries.

“If and when warranted, we will issue appropriate regulations as far as the insurance, pre-need and (health maintenance organization) industries are concerned,” he said.