Filipinos warned vs bitcoins, cryptocurrencies

In this April 3, 2013 photo, Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah. Bitcoin is an online currency that allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties. AP Photo

Filipinos hoping to cash in on the bitcoin craze were warned by the chair of the House banks and financial intermediaries committee on Wednesday about the risks of investing in cryptocurrency, as the price of bitcoin surged to $10,000.

Eastern Samar Rep. Ben Evardone urged Filipino investors not to part with their hard-earned money by buying bitcoins in the hope of making quick profits.

At the hearing of the committee on banks and financial intermediaries Tuesday, officials from the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, and representatives from the banking sector, “were one in advising the public against investing in bitcoin or any other virtual currency,” he said.

“They said it is very risky, speculative and [has] no safeguards,” Evardone said in a statement.

The price of bitcoin hit the $10,000 mark on Wednesday.

Evardone said Filipinos might get tempted into putting all their savings and retirement funds into bitcoin and other cryptocurrencies “without realizing that they could lose everything in one drastic plunge.”

“Cryptocurrencies like bitcoin are a promising low-cost remittance platform for Filipino workers sending their earnings home but they are extremely risky investments due to lack of regulatory protections for consumers,” he said.

Bitcoins and other electronic currencies are not backed by a bank, any existing currency unit in circulation, or any asset of tangible value that offer some degree of security for its buyers.

“Investors stand to lose everything overnight if exchange platforms for cryptocurrencies shut down or when the consumer’s virtual wallet containing confidential information is hacked or stolen,” Evardone said.

He cited the biggest cryptocurrency hacking incident in February 2014 when $460 million worth of bitcoins was lost in Japan in the infamous Mt. Gox case.

Another cryptocurrency, tether, was the subject of the most recent hack early this month resulting in a reported loss of $31 million, according to Evardone

“Until enough safeguards are put in place, investors would be well-advised to heed the admonitions of the Bangko Sentral and the Securities and Exchange Commission to put their money in safer investments,” he said. /cbb