The Philippines insurance regulator has warned companies under its supervision and the general public about the risk involved in cryptocurrency trading.
The Philippines’ Insurance Commission has warned insurers, pre-need companies, health maintenance organizations (HMOs), mutual benefit associations, brokerages and agencies, as well as the public about the risks of engaging in digital currency transactions, particularly when used as an investment vehicle.
In an advisory notice, Insurance Commissioner Dennis Funa said his office “does not, directly or indirectly, recognize cryptocurrencies as a viable investment or a medium of exchange involving any and all insurance, preneed or HMO-related transactions.”
He added that while the agency recognizes the value of technology in promoting the ease of doing business, the nascent cryptocurrency technology can also be used by criminals in illegal activities such as money laundering, fraud, scams, and terrorism financing.
“Further, cryptocurrencies are neither issued nor guaranteed by any government. Consequently, its value is purely dependent on market demand and supply, which makes it highly speculative and not suitable for investment.”
The commissioner urged the public and all entities regulated by his office to exercise caution when buying or selling cryptocurrencies. He advised potential crypto traders to educate themselves on the matter and keep abreast of the various rules and regulations issued by the supervisory bodies involved in cryptocurrencies, including the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC).
“At any rate, the Insurance Commission judiciously considers the disruptive innovation brought by cryptocurrencies and will issue appropriate regulations, as far as the insurance, pre-need and HMO industries are concerned, if and when warranted.”
BSP, SEC issue separate advisories
In January, the BSP issued a public advisory providing information to businesses and consumers on how to safely transact using cryptocurrencies.
Under BSP rules, digital currency exchanges operating in the Philippines are required to register with the agency as transfer and remittance companies. They must also provide sufficient security protocols to ensure the protection of their customers and address the risks associated with digital currency trading. These security protocols include safeguards against money laundering, terrorist financing, and technology risk management.
That same month, SEC Commissioner Emilio Aquino said his agency would monitor cryptocurrency trading but admitted it was reluctant to issue an outright ban on initial coin offerings (ICOs).
“We’re believers in technology, too, but at the same time, it’s not technology but the bad behavior of people taking advantage of the technology that we want to look at. If it will really help start-ups, why not?”