Bankers to probe cryptocurrency dynamics
The entry of cryptocurrency in the Philippines has pushed bankers to seriously take a closer look on the new financial service platform as it is deemed to disrupt the traditional service flow of the banking sector in the long run.
In an interview with Philippine National Bank (PNB) chairperson Flor Gozon, she said the banking sector, or her organization in particular is aware of this new development, but they are still looking at it closely and studying its dynamics and possible effects to the banking business.
A cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Bitcoin is one of more popular form of crypto-currencies, in fact it is making its presence felt in the Philippines.
Bitcoin, created in 2009, was the first decentralized cryptocurrency.
Cryptocurrencies are digital or virtual currency (VC) built to become a medium of exchange using cryptology to secure transactions.
Cryptocurrency expert Alex Faliushin from CoinLoan explained that in the next 5-10 years the trend of cryptocurrency and blockchain technology development will be fully positive. More and more states would officially accept and legalize cryptocurrencies, implement blockchain technologies in routine processes, transfer their real estate, education, medical, financial registers and accounting systems.
Currently more and more start-ups and companies prefer raising funds for business development by ICO/ITO (Initial Coin Offering/Initial Token Offering) instead of conventional initial public offering (IPO). Even now ICO is a fast, modern and transparent way to receive financial resources.
"In my opinion, crypto collaterals will greatly influence the conventional banking system, especially in countries with high bank interest rates," said Faliushin.
In the Philippines however, while the Bangko Sentral Ng Pilipinas (BSP) is still trying to understand the new platform, banks are also doing the same gesture and cryptocurrency will have to take more and more years to affect the traditional banking industry.
"It will take time for Filipinos to embrace it [cryptocurrency). Iba pa rin ang meron tayong settlement bank," Gozon explained.
"We are aware about it, but we are not into it [yet]," added Gozon.
Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. People could buy and sell bitcoins by tapping dealers or brokers or going to bitcoin exchanges.
Holders could also look for services or goods whose merchants accept bitcoin payments.
Recently, BSP reiterated its bid to regulate the bitcoin amid the global hype on the cryptocurrency.
First Metro Investment Corp. (FMIC) President Rabboni Francis Arjonillo recently called the attention of BSP to extensively address the hype on cryptocurrency sooner or later to make banks comfortable in dealing with digital money or currencies.
Arjonillo was quoted in a report saying that BSP will have to assure the country’s financial sector that a reliable platform is in the works for cryptocurrency trading and transactions.
They are not like credit cards or physical money deposited in banks as they are decentralized and therefore central banks cannot control them.
On December 29, 2017 the BSP issued an advisory to the investing public to exercise caution on the acquisition, possession, trading of VCs or dealing with VC-related offers.
"Unlike stocks or debt issues, VCs are not backed by any company or commodity and the price is purely dependent on market demand and supply. As such, investing in VCs presents a highly speculative and risky undertaking which might result into huge financial losses,” BSP said.