Public warned against cryptocurrency investments
The Insurance Commission has warned local firms and consumers against the risks in engaging in cryptocurrency transactions, especially as a supposed investment tool.
In particular, “the Insurance Commission does not, directly or indirectly, recognize cryptocurrencies as a viable investment or a medium of exchange involving any and all insurance, preneed or HMO (health maintenance organization)-related transactions,” Insurance Commissioner Dennis B. Funa said in an advisory.
Funa said that while the regulator recognized the value of technological advancement, specifically on the benefits it provides with respect to the ease of doing business, it also warned about “the corresponding risks involved in the use of cryptocurrencies as this can be used in perpetrating illegal activities such as scams, money laundering and terrorism financing, among many others.”
“Cryptocurrencies are neither issued nor guaranteed by any government. Consequently, its value is purely dependent on market demand and supply, which makes it highly speculative and not suitable for investment,” Funa noted.
As such, Funa said that the Insurance Commission “cautions the general public and all regulated entities (such as insurance companies, preneed companies, HMOs, mutual benefit associations, brokers, agencies) to act prudently whenever dealing in the acquisition, possession, and/or trading of cryptocurrencies.”
“Interested persons with dealings on cryptocurrencies are highly encouraged to educate themselves on the matter and be updated on the various rules and regulations duly issued by government regulatory agencies involving cryptocurrencies, such as but not limited to the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission,” Funa said.
Moving forward, Funa said that the regulator “judiciously considers the disruptive innovation brought by cryptocurrencies and will issue appropriate regulations, as far as the insurance, preneed and HMO industries are concerned, if and when warranted.”
This month, the BSP cautioned those who wanted to jump onboard the cryptocurrency bandwagon to exercise “extreme caution” when speculating on bitcoin and other forms of virtual money due to their inherent volatility that could easily result in large losses for inexperienced investors.
Last week, the SEC also warned the public against rampant internet-based bitcoin and cryptocurrency Ponzi schemes, referring to fraudulent operations wherein investors are enticed to place money due to hefty returns.
