Should cryptocurrency exchanges be regulated?

(Part VI)

As mentioned in my article last week, the use of cryptocurrencies has emboldened different countries to propose more measures to curb the increasing fraudulent activities by “faceless” fraudsters (or scammers) in the Internet. Cyber fraud is a reality that we cannot ignore anymore. There are many kinds of fraud that can be committed by the use of cryptocurrency. There is the so-called cyber fraud on investments and securities transactions, consumer fraud, tax fraud, credit card fraud, corporate fraud, insurance fraud, and many other kinds of cyber fraud.

The reality of cyber fraud does not however mean that we should no longer avail of the Internet and other online services. It simply means that the users of Internet have to be aware of the danger of fraud and other abuses in cyberspace. They have to be cautious and should know how to spot Internet scams. They should also be familiar with self-defense measures that can be taken to fend off cyber fraud.

Also, many of us who are using the computer to transact business are vulnerable to being victims of cyber fraud simply because many of us cannot resist get-rich-quick schemes or too-good to be true bargains.

In the Philippines, we have provisions in our Revised Penal Code of the Philippines on fraud. Likewise, we have the Cyber Crime Prevention Act of 2012 (Republic Act No. 10175) on computerrelated fraud. However, we still have to wait for a test case to find out if our laws on cyber crime is adequate to cope up with cyber fraud cause by the use of cryptocurrency.

In Republic Act No. 10175 (and reiterated in the Implementing Rules and Regulations (IRR) Implementing RA 10175) computer-related fraud is defined as “The unauthorized input, alteration, or deletion of computer data or program or interference in the functioning of a computer system, causing damage thereby with fraudulent intent: Provided, That if no damage has yet been caused, the penalty imposable shall be one (1) degree lower.”

Cryptocurrency scam is spreading fast. In one Internet report, it has been mentioned that about US$9 million is lost each day due to cryptocurrency scam/fraud. It has also been reported in this same website that about US$1.36 billion worth of cryptocurrencies have been stolen by fraudsters during the first two months of 2018. (Reference: https://www.investopedia.com/news/ beware-9m-are-lost-each-day-cryptoscams/)

Because of the proliferation of cyber crimes like cyber fraud, users of computers as well as government regulators are not just focused on regulations to protect users of cryptocurrency but with cyber security as well.

As computers continue to be interconnected at a phenomenal rate – not only through the Internet but through other networks as well, the need for network security increases.

Security is a major concern of entities that want to do business through the Internet especially through the World Wide Web – which incidentally is the fastest growing part of the Internet. Also, the World Wide Web is that part of the Internet which is most vulnerable to attack,

Compared to other networks, the Internet is more vulnerable to attacks from intruders. While the Internet is considered the mother of all networks that connects other networks worldwide, unfortunately, it was not designed with security in mind. Security was not a part of the original network design of the Internet since it was conceived primarily as a research network and emphasis was placed on connectivity among collaborating parties rather than security.

Finally, the particular security measures proposed for cyber crimes must be applicable to the specific threat. This must be so considering that security measures that are cropping up to protect computer users are as varied as the security threats that are hurting the growth of Internet. Simply, security measure must be matched to the specific threat at hand.

Have a joyful day! (For comments/ reactions please send to Ms. Villafuerte’s email: villafuerte_nelly@ yahoo.com).