News Risk Management02 May 2018

Philippines:Insurance Commission warns against cryptocurrency transactions

02 May 2018

The Philippines Insurance Commission (IC) has issued a warning to the public and the industry against dealings involving cryptocurrencies.

Advising prudence in the acquisition, possession and trading of these cryptocurrencies, commissioner Dennis B. Funa said in an IC statement last week that the regulator recognised the value in technological advancement that their use brings, but also its corresponding risks.

“The apparent increase in the demand for cryptocurrencies and its popularity in terms of usage as a medium for payment and remittances worldwide makes cryptocurrencies prone to being used for facilitating illegal activities, such as scams, moneylaundering and terrorism financing, said Mr Funa.

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

The Philippines Securities and Exchange Commission had also recently issued a warning that Internet-based cryptocurrency and ‘ponzi’ schemes are running rampant, and had specifically cautioned against public investment in 14 new unregistered cryptocurrency schemes run by unregistered entities.

A formal regulatory approach on virtual currency was adopted by the Philippines’ central bank in February 2017. Under the regulation, 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 are required to register with the BSP as remittance and transfer companies. Notwithstanding this regulation, the central bank does not endorse virtual currencies as legal tender, store of value or an investment vehicle.

Mr Funa encouraged individuals with dealings on cryptocurrency to educate themselves on the matter and keep updated on regulations issued by the relevant Philippines government agencies.

“At any rate, the Commission is keeping an open mind to the potential usefulness of cryptocurrencies and judiciously considers the innovation brought by cryptocurrencies. If and when warranted, we will issue appropriate regulations as far as the insurance, pre-need and health maintenance organisations (HMOs) are concerned.

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