And so the Bangko Sentral ng Pilipinas (BSP), the Central Bank of the Philippines already issued an advisory on bitcoin and other cryptocurrencies.
Image Credit: Wikimedia Commons
I believe it’s a good and timely move. But reflecting back, there is really nothing new with this announcement (ok maybe for me and other crypto coins dudes and dudettes out there). But I will reserve my other personal commentaries for a future post.
For now here is the full text of the BSP’s advisory posted at the Bangko Sentral ng Pilipinas official website (http://www.bsp.gov.ph/) last week:
Warning Advisory on Virtual Currencies
It has come to the attention of the Bangko Sentral ng Pilipinas (BSP) that virtual currencies like Bitcoin are now being exchanged in the Philippines. The public is hereby warned that such exchanges are not regulated by the BSP or by any regulatory authority in the country at this time. Thus, there are no existing regulations which would specifically protect consumers from financial losses if an organization that exchanges or holds virtual currencies fails or goes out of business. Moreover, there is no assurance that the value Bitcoin or any virtual currency would be stable. In fact, its value can be highly volatile.
The BSP will be closely monitoring developments on these virtual currencies particularly on their possible use for money laundering and other illegal purposes, and will adopt appropriate measures as needed.
In the meantime, the public is enjoined to familiarize themselves with some basic information on the subject. Further understanding can be gained through personal researches on the internet and other forms of media.
What you need to know about virtual currencies
A virtual currency is a form of unregulated digital money, meaning it is not issued or guaranteed by a central bank. It allows purchase of both virtual goods (such as in online gaming environments and social network) and real goods and services (such as in retailers, restaurants and other establishments). Unlike electronic money, which is backed by cash for 100% of its stored value, virtual currencies are not backed by any commodity like cash, gold or silver. Rather, they are merely valued subjectively according to one’s ability to exchange them for goods.
Things to think about before buying, holding or trading virtual currencies
- You can lose your money through a virtual currency exchange – Exchange platforms are unregulated. If a virtual currency exchange loses or fails, there is no legal protection that covers you for losses arising from any funds you may hold on the said exchange. At present, there have already been a number of cases where virtual currency exchange platforms have gone out of business or have failed.
- Virtual currencies in your digital wallet can get stolen – When buying virtual currencies, the same are stored in a “digital wallet,” on a computer, laptop, PC tablet or smart phone. This digital wallet makes use of public and private keys or passwords that allow you to secure your wallet. Still, there have been a number of reported cases whereby consumers lost large amount of virtual currencies from their wallets through hacking. Further, since virtual currencies do not have central organizations that hold and re-issue keys or passwords, losing the key or password to your digital wallet would mean losing your virtual currency forever.
- You are not protected when using virtual currencies for payment –Payments made through virtual currencies like Bitcoin are immediate, direct and non-reversible. Further, since the use of virtual currencies is not regulated, there are no existing regulations to protect you in case of unauthorized or incorrect debits made from your digital wallet.
- The value of your virtual currencies cannot be guaranteed and can change quickly – The value of virtual currencies has shown several sharp increases for the past year, and several sharp decreases as well. If you buy a virtual currency today, it is quite possible for its value to drop sharply and permanently the next day.
- Virtual currencies may be used for money laundering and other illicit activities – Virtual currencies provide consumers with high degree of anonymity and therefore may be used for money laundering and other illicit activities. This illegal use can affect you, as law enforcement agencies may decide to close exchange platforms and prevent you from accessing funds that the platform may be holding for you.
I will write more about bitcoin (and maybe other cryptocoins) here at menardconnect.com soon so this will be a good starting post on this topic.
In the mean time, if you want to read more about bitcoins and malware, kindly visit TrendLabs Security Intelligence Blog.