The Central Bank of the Philippines also known as the Bangko Sentral ng Pilipinas (Bangko Sentral) has issued a warning to citizens urging them to stay away from unregulated virtual asset service providers(VASP).
As contained in the published announcement, Bangko Sentral emphasized that virtual assets are a risky asset class with high volatility which in turn will lead to huge financial losses from price fluctuation.
Based on a statement made by Bangko Sentral ng Pilipinas, the public is urged to desist from going into business with VASPs that are either unregistered or domiciled abroad. Already, there is a high risk of price volatility in the crypto ecosystem, additionally, VASPs located outside the country’s region may “present an additional challenge on enforcing legal recourse and consumer protection and redress mechanisms for local customers, among others.”
To clarify, BSP explained that the government and the registered VASPs do not surely guarantee protection against fund losses as a result of volatility and fluctuations.
However, many of the scams and breaches perpetrated in the ecosystem were successful with the use of unregistered VASPs. Customers of VASPs are advised to conduct their due diligence and ensure that all risks have been taken into consideration before finally inputting their investments.
Correspondingly, prospective VASP customers can confirm the registration status of any crypto firm that they intend to trade with on a list that has been provided by the financial regulator.
Funnily, this precautionary warning is coming at a time when Bangko Sentral ng Pilipinas will not issue any license or approval to crypto firms and other digital assets providers.
A week ago, the financial watchdog announced that it would not process any application for a VASP license for the next three years starting from September 1st. Therefore, any VASP that wishes to make amends before its users start pulling out, would not be able to do so until 2025.
Although, it is still a tentative decision that is subject to market development reassessment. As an exception, crypto entities who wish to expand their offerings and act as a VASP with Supervisory/Assessment Framework (SAFr) would still be allowed to apply for a license.
Image source: Shutterstock