BSP Governor Medalla Reiterates: Crypto is Risky

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Following the collapse of another global cryptocurrency exchange, the Bangko Sentral ng Pilipinas (BSP) reiterated the risks of blindly investing in cryptocurrency and reminded the public to remain cautious and always conduct due diligence before engaging as the central bank is still studying the prospects of digital assets.

“I have already said many times in the past that crypto assets are very risky and those who invest are advised to invest only what they can afford to lose,” BSP Governor Felipe Medalla stated.

Medalla stressed in his comment about the FTX bankruptcy that the central bank believes that even stronger measures are needed to prevent harm from investing in the volatile cryptocurrency. 

The collapse of Sam Bankman-Fried’s crypto empire started from a Coindesk article that analyzed a balance sheet from Alameda Research revealing that the trading firm’s assets are mostly composed of FTX token, FTT. Both the trading firm Alameda Research and crypto exchange FTX are owned by Bankman-Fried. Initially, its rival Binance priorly announced that it will liquidate their FTT holdings, its CEO denied conspiracy allegations and even signed a non-binding agreement to acquire the firm, however, Binance eventually dropped the bid because they deemed that “the issues are beyond our control or ability to help.” (Read more:  Binance Will No Longer Acquire FTX)

Last June, even before his appointment as the BSP governor, Medalla already expressed that he was not keen on regulating cryptocurrency as the digital asset is a scheme based on the “greater fool theory.” (Read more: Incoming BSP Governor Dismisses Crypto, Not Keen in Regulating)

Medalla’s predecessor, on the other hand, former BSP governor and current Department of Finance (DOF) Secretary Benjamin Diokno was open to exploring the potential of cryptocurrency during his term by spearheading the plans to launch a central bank digital currency (CBDCs.)

However, Diokno stated last month that CBDC “is not yet worthwhile for the Philippines.” Priorly, the CBDC launch will have a pilot test in Q4 2022 for wholesale transactions (as opposed to retail transactions). CBDC is a form of electronic money that is backed by the central bank reserves, as opposed to present versions of digital money in anyone’s bank accounts or mobile wallets.

Despite the CBDC remark, Diokno remained optimistic with the new technology stating  that “there is no question that blockchain is superior.” 

Currently, the BSP and Securities and Exchange Commission (SEC), are still seeking legislation from the senate to regulate cryptocurrencies and other digital assets properly. 

This article is published on BitPinas: BSP Governor Medalla Reiterates: Crypto is Risky

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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