Exclusive: Philippine Central Bank to ‘Study Crypto’ Before Issuing Rules
The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, needs more time to fully understand cryptocurrencies before publishing rules about the space.
The Philippines central bank said it would carefully study cryptocurrency as a useful financial tool to move money around or a financial instrument before issuing rules on digital assets.
In an interview, Bangko Sentral ng Pilipinas (BSP) Deputy Gov. Diwa Guinigundo said they need to understand first the implications of cryptocurrencies, such as Bitcoin, Ethereum, Ripple, and others, to be able to come up with a best practice regulation to promote the new currency.
“We cannot just issue regulations on something we do not fully understand,” Guinigundo said. “It would be unwise to regulate a sector just for the sake of regulating, but then later on pullback our policies because we made a mistake. That is not sound policy,” he added.
However, the acting central bank head added the country’s monetary policy has no issue with blockchain. In fact, he said, the BSP is encouraging the application of the distributed ledger technology (DLT) in the financial sector.
“The banks are using blockchain applications in their system and platforms. Even financial technology (fintech) firms are actively using blockchain as well, but we don’t have any problem with that. We are not regulating their use of the technology. It is only with cryptocurrency that we have some concerns,” he continued.
During the Philippine Economic Briefing (PEB) held in September in London, Guinigundo said the country’s central bank is encouraging the application and development of blockchain in government institutions and the financial markets but remains cautious on digital currencies.
He told a panel of British investors that among blockchain’s uses cases is the reduction of transaction costs, as well as making banking more efficient. In addition, he said the technology allows financial inclusion more achievable.
According to Guinigundo, as a policymaker, the central bank is duty-bound to protect the interests of retail investors, as well as those who are venturing into the financial markets and have yet to develop their investing or trading skills.
“It’s like this, if sophisticated investors are scammed by unscrupulous actors in the digital currency space, then they might be at fault for not practicing due diligence. After all, they are supposed to be sophisticated investors and investor-savvy. But if retail or unsophisticated investors are scammed by investing in cryptocurrencies, then it might be because we as policy-makers have not provided sufficient protection," he said.
He added the BSP had issued several warnings through circular memos to remind investors about the risks in cryptocurrency trading and investing. Still, Guinigundo said that it is still too early to dismiss virtual currencies. And soon, the BSP will release rules on the space.