BSP, SEC: Crypto Regulation is Not Endorsement

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By Shiela Bertillo

Melchor Plabasan, the Bangko Sentral ng Pilipinas (BSP) director of technology risk and innovation supervision department, stated that the central bank does not encourage people to invest in cryptocurrency. While the Securities and Exchange Commission (SEC) Commissioner Kelvin Lester Lee reiterated that the public must do their own due diligence before engaging. These financial regulator’s are part of the panel discussion during the BSP’s Cryptocurrency 101 virtual conference yesterday, November 23.

“Our regulation isn’t really meant to endorse cryptocurrency as a legal tender as a store of value. I mean, our regulation is meant to protect the regulated financial system. That’s why we impose certain standards on AML (Anti-Money Laundering), CFT (Certificate in Finance Technology), and cyber consumer protection, because of the possibility that this crypto will interface with the regulated financial systems,” Plabasan stated.

He also noted the BSP’s objective was really meant to protect the financial systems. 

“To say that we encourage people to invest in crypto is too strong of a statement for me or anyone to make at this point, but the technology is new, it has a lot of potential but at the same time a lot of risk,” Commissioner Lee seconded.

Lee reminded that investors must be careful with engaging with crypto-related investments as there are numerous and various scams going around.

“From the last couple of years, since 2019,  we’ve issued a total of 219 advisories warning people about investing in these things. Roughly around 50 are cryptocurrency-related scams.” he added. 

The commissioner also used as an example the self-proclaimed “pambansang scammer” Xian Gaza’s “Xian Coin” which claims to be backed by a “XianBank” that is, according to Gaza, a digital bank in the country. There are currently 6 registered digital banks and XianBank isn’t one of those. (Read more: SEC Issues Advisory Against Xian Gaza, Xian Coin)

“Please before you invest, before you look into these digital assets or cryptocurrencies, please check with SEC.” Lee said.

He also stated that checking through the SEC database before investing on any crypto-related investment is “not conclusive but it at least gives you an idea.”

However, Plabasan said that the BSP welcomes pushing innovation forward while still protecting the people from risks as the central bank’s branding is “flexible and open yet cautious.”

“With respect to the regulation, we are not regulating virtual assets or cryptocurrencies per se what we are regulating really are the activities where these are used. That’s why in our previous issuance we mentioned that if these businesses are engaged in exchange, in transferring crypto, in custody then you are required to register with the BSP.” he noted.

In this regard,  the BSP recently stated that the central bank is still studying Axie Infinity, a popular play-to-earn non fungible token (NFT) game, and its possible status as an operator of payment system (OPS). Once confirmed the game and its developers are required to register with the BSP. (Read more: BSP: Axie Infinity’s OPS Status Still Under Review)

This article is published on BitPinas: BSP, SEC Do Not Encourage the Public to Invest in Crypto

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