Virtual currency transactions double to $390 million in 2018

MANILA, Philippines — Transactions involving virtual currencies more than doubled last year despite several advisories issued by the Bangko Sentral ng Pilipinas (BSP) cautioning the public on the acquisition, possession and trading of virtual currencies, particularly bitcoins.

Melchor Plabasan, officer-in-charge of the BSP’s Technology Risk and Innovation Supervision Department, said the value of transactions involving virtual currencies amounted to $390.37 million last year, $201.19 million higher than the $189.18 million recorded in 2017.

Transactions, he said, included conversion from peso and other currencies to virtual currencies with $208.27 million, conversion of virtual currencies into peso and other currencies with $173.33 million, and international inward remittance facilitated through virtual currencies with $8.77 million.

Cryptocurrency is a type of virtual currency that uses cryptography – a method of storing and transmitting data in unreadable form so that only the intended receivers can read and process it. Bitcoin is the first and most popular cryptocurrency to date, introduced in 2009.

Plabasan said the increase was recorded despite the 6.5 percent decline in volume to 6.15 million transactions last year from 6.58 million transactions in 2017.

He explained the trends in the buying and selling of cryptocurrencies actually reflect the way investors and users naturally behave.

“Small to medium crypto players tend to sell as soon as target profits are met (2017) while large value players hold longer but will immediately sell to secure their gains or protect their holdings when triggered by events such as the sudden decline in 2018,” Plabasan said.

Meanwhile, he said the buying behavior could simply be explained by the growing popularity of cryptocurrencies and the speculative attitude of some crypto investors hoping to capitalize on the next rise of crypto prices.

Following the rise in the use of virtual currencies for payments and remittances in the Philippines, the regulator established a formal regulatory framework for virtual currency exchanges through Circular 944 dated Feb. 6, 2017.

Virtual currency exchanges are companies or businesses engaged in changing virtual currencies into fiat currency and vice versa. The act of converting virtual currencies into Philippine money could facilitate payments and remittances.

The circular required virtual currency exchanges to register with the BSP as remittance and transfer companies and were required to put in place adequate safeguards to address the risks associated with virtual currencies, including control measures to counter money laundering/ terrorist financing, technology risk management systems, and consumer protection mechanisms.

The BSP has so far approved the registration of 10 virtual currency exchanges including Bexpress Inc., Coinville Phils. Inc., ABA Global Phils. Inc., Betur Inc. (Coins.ph), Rebittance Inc., BloomSolutions Inc., Virtual Currency Philippines Inc., ETranss  Remittance International Corp., Fyntegrate Inc., and ZyBi Tech Inc.

The BSP said virtual currencies including bitcoins need not be restricted as the regulator aims to address the risks as these intersects with the financial system.