Cryptocurrency not likely to replace fiat money soon

CEBU, Philippines —  Cryptocurrencies or tech assets are not likely to replace fiat money or the Philippine currency, at least not in the near future.

While the Bangko Sentral ng Pilipinas (BSP) is keeping an open mind in recognizing the growing popularity of cryptocurrencies in accordance to its policy to consider and promote innovation in the banking system, financial regulators still keep on reminding the public to be wary of the risks it entails.

Supervisory Policy and Research Deputy Director Noel P. Tianela said “we recognize the capacity of the cryptocurrency, but given our approach to these innovations, we also recognize the inherent risks posed by the cryptocurrency system.”

Considering that the value of the cryptocurrency changes very quickly and there is a lot of anonymity of those who transact, Tianela said doing transactions without disclosing the users’ identities makes it susceptible to theft and loss since all the assets are available online.

And while the possibility is high for cryptocurrencies to be used for illegal purposes, such as money laundering, Tianela said “we expect the banks to have a more robust technology response system. Investors should be aware of the risks considering that these currencies are not guaranteed by the government unlike deposits.”

BSP General Counsel and Senior Assistant Governor Elmore O. Capule also reminded the public that “cryptocurrency is actually not a currency but a tech asset. Our currency is still the peso.”

He said that when the subject on cryptocurrencies was discussed by other Central Bank officers in the region as to whether or not it will be regulated, he cited that the Governor of the Bank of Indonesia opted to prohibit it for lack of public awareness.

He however said that unfortunately it is not that simple to disregard cryptocurrencies “because in the world today, whether we like it or not, this is happening. It is reality and we have to deal with it.”

Capule said “If we step back and not do anything about it and before we know it, it is already out of control. We are trying to regulate it slowly, we are trying to understand it, and we issued advisories for the public to be very wary of its risks.”