The Insurance Commission (IC) has cautioned the public and all its regulated entities against dealings involving cryptocurrencies on the back of the risks they entail.
Insurance Commissioner Dennis B. Funa said cryptocurrencies are neither issued nor guaranteed by any government and that their value is purely dependent on market demand and supply, which make cryptocurrencies highly speculative and not suitable for investment.
“While recognizing the value of technological advancement on the use of cryptocurrencies, the IC, likewise, recognizes the corresponding risks involved in the use of cryptocurrencies. Thus, the public is being cautioned to act prudently in the acquisition, possession, and trading of
cryptocurrencies,” Funa said.
A formal regulatory approach on virtual currency was adopted by the Bangko Sentral ng Pilipinas (BSP) in February 2017. Under the BSP regulation, any entity that offers services or engages in activities that provide facility for the conversion or exchange of fiat currency to virtual currencies or vice versa are required to register with the BSP as remittance and transfer companies.
“The apparent increase in the demand for cryptocurrencies and its popularity in terms of usage as a medium for payment and remittances worldwide make cryptocurrencies prone to being used for facilitating illegal activities, such as scams, money laundering and terrorism financing,” Funa added.
Notwithstanding this regulation, the BSP does not, in any way, endorse virtual currencies as legal tender, store of value or an investment vehicle, according to the IC.
Earlier, the Securities and Exchange Commission (SEC) warned that Internet-based Bitcoin and cryptocurrency Ponzi schemes are running rampant. The SEC warned the public against investing in 14 new cryptocurrency schemes run by unregistered entities.
“Individuals with dealings on cryptocurrencies are highly encouraged to educate themselves on the matter and be updated on the various rules and regulations issued by different government agencies, such as the BSP and the SEC,” Funa said.
Image credits: Bloomberg