MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is looking at ways to possibly regulate the virtual currency bitcoin, Governor Amando Tetangco Jr. said.
"The BSP is studying the appropriate regulatory approach to this innovation," he said, adding that the central bank is “trying to better understand the intricacies of its use and implications on consumer protection."
Tetangco said that while bitcoin can possibly offer a low cost remittance solution, there are weaknesses to the innovation that have to be addressed.
Bitcoin, which started circulating in 2009, is a form of electronic money independent of traditional banking.
Its value primarily depends on people’s confidence in it, and it relies on a network of computers that solve complex mathematical problems as part of a process that verifies and permanently records the details of every bitcoin transaction that is made.
"As we understand it, there still isn't global agreement on how to handle this new technological innovation," Tetangco said.
The BSP earlier warned that public that aside from being unregulated, bitcoins themselves aren't backed by hard assets, such as gold, metals or other currencies, increasing the chances their value could plummet.
"Those who engage in virtual currency exchange could lose their money through a number of ways," Tetangco said.
"Some of these include outright fraud, system failure as trading would be exchange platform-dependent and there have been a number of cases reported where the trading platforms have gone out of business or failed, or through the users' own mistakes when the virtual currencies are stolen from the users' digital wallet," he added.
The world's largest bitcoin exchange, Mt. Gox, received US bankruptcy protection on Monday to temporarily halt US legal action against the Japanese company by traders who allege the operation was a fraud.
The Tokyo-based firm shut down operations in February after said it may have lost 750,000 of its customers' bitcoins to hackers.