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BSP to Play-to-earn Gamers: Be Cautious of Potential Illicit Activities

BSP added that people involved in “play-to-earn” games should exercise caution as there is a threat of abuse.

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By Nathaniel Cajuday

Play while you earn. Enjoy. But be watchful.

The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, gave a warning to the public that are involved in “play-to-earn” online gaming, as illicit financial activities may happen in the digital space.

“The Bangko Sentral ng Pilipinas (BSP) advises those engaging in these games to be thoroughly aware of how these work as the digital space provides a borderless and wider playing field for fraudsters or cyber criminals to carry out illicit financial activities,” the BSP stressed.

BSP added that people involved in “play-to-earn” games should exercise caution as there is a threat of abuse.

“Digital gaming token transactions have high degree of anonymity and are not subject to Know Your Customer policies,” the BSP said while emphasizing that these transactions are vulnerable to hacking, theft, and cyber threats. (Read More: What is KYC)

Moreover, the central bank also highlighted that it will be difficult to file complaints in cases of fraud since there is no central authority mandating digital tokens. 

“Play-to-earn” online games are games where players can earn rewards through playing. These rewards can then be turned and exchanged to real money. An example of this is Axie Infinity, today’s most vibrant “play-to-earn” online game in the country. (Read More: Play to Earn Philippines: Make Money Playing Blockchain Games 101)

Earlier this month, BSP, together with the Securities and Exchange Commission (SEC), concluded that Axie Infinity is not required to register as of the moment, but the agencies closely monitor the popular game. 

In Axie Infinity, players earn the cryptocurrency called Smooth Love Potions (SLP) when winning in-game battles. SLP can then be exchanged for cash though people can also use SLP to breed more Axies. 

According to Swarup Gupta, Industry Manager at The Economist Intelligence Unit, more Filipinos are expected to have an interest in play-to-earn online games because of the pandemic’s critical effect on their finances. A number of Filipinos have already found Axie Infinity as an additional way, with some as the only way, to earn money in the one-year-and-six-month-long quarantine of the country. 

Gupta, moreover, suggested that regulators like the BSP and SEC should raise awareness regarding risks related to dealing with virtua, as reported by BusinessWorld.

“The SEC and the central bank need to usher in comprehensive legislation to regulate virtual assets and cryptocurrency and ensure that norms applicable to such operators are as stringent as those that financial companies have to abide by,” he stressed while reiterating that regulatory approach should keep up as cryptocurrency starts to be influential. (Read More: SEC is Investigating Regulatory Touchpoints Regarding Axie Infinity)

Meanwhile, despite the BSP’s announcement that Axie Infinity does not need to register yet, the central bank stated that what they are monitoring is the payment component.

“Ang pinag-aaralan namin is yung payment component. Papaano ‘pag napakaraming merchants sa Pilipinas ang nag-a-accept ng SLP (smooth love potion),” said Melchor Plabasan, Director of the BSP’s Technology Risk and Innovation Supervision Department.

“I think right now, it is really, it is a virtual game. Mukhang hindi naman siya Ponzi scheme,” his assurance to the public.

BSP reminded the public to transact only with BSP- registered Virtual Asset Service Providers (VASPs) which are required by Circular No. 1108 to set up consumer awareness measures. In this way, the chance of illicit financial activities to happen may be reduced.

This article is published on BitPinas: BSP Warns Play-to-earn Gamers of Potential Fraudulent Activities

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