CEBU, Philippines - Regulating the bitcoin industry in the Philippines is a good move especially as the volume of bitcoin transactions rises in the future, a former president of the Cebu Bankers Club said.
"The BSP (Bangko Sentral ng Pilipinas) should have finished their research and study how secure the virtual currency or bitcoin is. Regulating [it] is but just proper to control the volume [among others]," Maximo Eleccion, CBC's current security committee chair, told The FREEMAN on Thursday.
A report from Philippine Star said the BSP is moving to regulate the fast growing but potentially risky bitcoin industry in the Philippines.
The report quoted BSP Deputy Governor Nestor A. Espenilla Jr. as saying the Monetary Board has already approved the circular regulating bitcoin entities.
“They would now need to register as a money transfer business. At some point, if they are not registered with the BSP, no bank will deal with them,” Espenilla was quoted as saying.
The central bank was expected to come out the circular this week after getting the nod of the Monetary Board on the proposed regulation.
Bitcoin is deemed the most popular type of digital currency created anonymously online in 2009, in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds.
“We are doing this because it might be a venue for money laundering and since it is electronic, it may be hacked so we are regulating the virtual currency exchange,” Espenilla said.
Espenilla said the bitcoin market is already growing in the Philippines as some Filipinos working abroad are using this channel to send dollar remittances.
Eleccion said if OFWs would patronize this because this is a cheaper mode of transferring money to the country, "then this would impact financial institutions and money transfer agents."
"But it would take some time before we ge t used to this and patronize. Many will still go for the traditional way of transferring money because of safety and security," the bank official said.
Digital currencies like bitcoin offer cheaper and quicker way to move cash than through traditional remittance channels.
A December report from Bloomberg said the Bangko Sentral estimated the volume of remittance transactions involving virtual currencies to have risen to at least $2 million a month.
The report said that while that "represents a small proportion of the record $25.8 billion of funds Filipinos working abroad sent home in 2015, it signals the need to regulate the use of digital currencies, which are currently governed by a 'mere advisory to the public' about their pros and cons."
The central bank had been issuing advisories on the use of bitcoins but now deems it necessary to regulate bitcoin usage because it has the potential to grow big in the future. As early as 2014, the BSP had already warned the public against the use of digital currencies.
The regulation is deemed vital amid fears that the virtual currency exchange might be a venue of money laundering activities.
The Philippines has stepped up its efforts against money laundering, after thieves hacked into the Bangladeshi central bank’s account at the US Federal Reserve in February last year and routed $81 million to accounts into Rizal Commercial Banking Corp.
Most of the funds disappeared after being transferred through a remittance company to Philippine casinos.
Bitcoins can also be used to buy merchandise anonymously. International payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Also, some people just buy bitcoins as an investment, hoping that they’ll go up in value.
Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies.
Customers can buy and sell bitcoins through dealers or brokers or going through web-based bitcoin exchanges that enable holders to directly buy and sell the virtual currency. (FREEMAN)