SEC urges caution on digital investment

THE securities regulator has warned the public to exercise caution in making digital and cryptocurrency investments, noting the presence in the Philippines of investment scams specializing in the assets.

At a webinar organized by the Philippine Stock Exchange on Sunday, Vicente Graciano P. Felizmenio, Jr., director of the Markets and Securities Regulation Department at the Securities and Exchange Commission (SEC) said that the regulator “is not against DLT (distributed ledger technology), it’s not against blockchain, and definitely we even encourage the use of it in the market, and we favor innovation.”

However, he warned that some entities are taking advantage of the rise of cryptocurrency, noting recent SEC advisories against scams by unlicensed parties that purport to invest client funds in digital assets.

The entities the SEC flags via its advisories defraud investors by claiming they invest in cryptocurrency.

Bangko Sentral ng Pilipinas (BSP) Circular No. 1108 or the Guidelines for Virtual Asset Providers provide that those entities that engage with virtual assets are required to secure a license from the BSP.

BSP Technology Risk and Innovation Supervision Department Director Melchor T. Plabasan said central banks are “veering away from calling these cryptocurrencies currency or money.”

“There’s really a technical and legal definition for currency or money,” Mr. Plabasan said. “It should be backed by the central bank or by a monetary authority; it should be stable.”

Cryptocurrencies in the Philippines are classified as digital or virtual assets.

Mr. Plabasan said according to current regulations on virtual asset service providers, “We really conduct thorough evaluation, on-site and off-site supervision; we do… technical review before these products and services are offered to the public and when you secure your license as a virtual asset service provider, then you are now required to comply with the BSP’s regulations,” which include rules on Anti-Money Laundering, consumer protection, and cybersecurity.

The BSP maintains a registry of licensed virtual asset providers to ensure that investors can get regulatory support.

“If you want to experience how it is to trade in retail for crypto, train in bonds.ph,” Union Bank of the Philippines Senior Executive Vice-President and Chief Technology and Operations Officer Henry Rhoel R. Aguda said.

He said bonds.ph is “a normal retail bond,” with bond investment for as little as P5,000. He said the platform uses blockchain.

“The bonds are not yet tokenized, (but) the mechanism and technology to buy and sell Philippine retail bonds is already in blockchain,” Mr. Aguda said. “That’s gone through regulatory approval, that’s in the partnership with the Bureau of the Treasury, and who knows in the future, that same experience of buying and selling retail bonds can be applied safely and securely on cryptocurrencies.” — Keren Concepcion G. Valmonte