Bitcoin Trading Popularity Rings Alarm Bells at Philippine’s Central Bank

Bitcoin, Philippines

Bitcoin’s dramatic gains have brought the cryptocurrency 110-percent higher this year, but it remains prone to risks of price manipulation and terrorist financing, according to Mr. Benjamin Diokno.

The governor of the Bangko Sentral ng Pilipinas (BSP) said he is not entirely convinced about the growing use of cryptocurrencies in the country. The Philippine Star quoted Diokno on Monday saying that his office would continue crackdown on the illegal operations that use cryptocurrencies, especially which concerns terrorist financing.

“I think that is my view. So we will go easy on that,” Diokno said.

Is the US Behind Diokno’s Bitcoin Concerns?

Mr. Diokno’s statement appeared at a time when regulators had already taken steps to legitimize bitcoin businesses in the Philippines. In April, the BSP granted an operational license to a total of 10 cryptocurrency exchanges, including, a payment and wallet application, which in April partnered with American remittance giant, Western Union, to enable Filipinos to conduct cross-border money transfers.

At the same time, the US government increased its surveillance on the money transfers made by regional Overseas Filipino Workers (OFWs) for their alleged role in financing terrorists.

Ms. Sigal Mandelker, US Treasury Under Secretary for Terrorism and Financial Intelligence, said in April that remittance agencies had been misused as a channel for terrorist financing. Excerpts from her telephonic briefing:

“I can’t go into the specifics but generally speaking this is something that we monitor very carefully and the subject of information and cooperation with regional partners.”

In her speech last month, Ms. Mandelkar recognized bitcoin as an emerging financing tool for rogue states, terrorist organizations, and their sympathizers. She claimed that Hamas, a Palestinian Sunni-Islamist fundamentalist organization, received about $5,000 worth of donations in bitcoin in February this year.

“This might not seem like that much money,” said Ms. Mandelkar. “But the cost of carrying out a terrorist attack can be low.”

The Balancing Act

Such developments raised concerns among those bitcoin-friendly countries that were attempting to stay in the US’ good books. Mr. Diokno merely reiterated the impending global concerns in his latest statement.

Nevertheless, the concerns do not stop the Philippines from pursuing a higher standard of cryptocurrency regulations, according to BSP Deputy Governor Diwa Guinigundo. The Philippines Star quoted him saying that the central bank tends to create a perfect balance between innovation and control. Excerpts:

BSP approaches these new forms of technology based on regulatory sandboxes that would allow the regulator to balance encouraging technology innovation with a robust solution and consumer protection.

As of 2018, the value of transactions involving cryptocurrencies had surged by 100-percent to $390.37 million.