Manila, Philippines –The Insurance Commission (IC) has sent out a warning to the public and regulated entities against cryptocurrencies due to the risks involved in using them.
In a notice posted on the IC website, commissioner Dennis Funa advised the public to exercise caution when dealing with cryptocurrencies since they can be used in numerous illegal activities and are not practical means of investment.
“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.
Funa said the sudden surge in demand for cryptocurrencies and their popularity as a payment and remittance platform “makes (them) prone to being used for facilitating illegal activities, such as scams, money laundering, and terrorism financing”.
Funa advises the public to act wisely when dealing, owning and/or trading cryptocurrencies.
Since cryptocurrencies, said Funa, are neither issued nor guaranteed by the Philippine government, their value is highly dependent on market demand and supply making them highly speculative and an impractical investment.
Funa urges individuals who are dealing with cryptocurrencies to educate themselves on the matter and to be constantly updated on the rules and regulations imposed by different government agencies, like the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC).
Funa cited BSP Circula 944 issued February last year, requiring “any entity that offers services or engages in activities or engages in activities that provide facility for the conversion or exchange of fiat of currency to virtual currencies, or vice versa” to register as a remittance and transfer company with the BSP.
Despite this regulation, Funa clarifies that the BSP does not, by any means, endorse the use of virtual currencies as legal tender, store of value or an investment medium.
For its part, the SEC also warned the public against bitcoin and cryptocurrency scams. According to the SEC, crypto scams are now becoming rampant with close to 14 entities reportedly engaged in such activities.
Funa said despite the caution the IC will “keep an open mind” to the potential of cryptocurrencies in 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.