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The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
According to the Bangko Sentral ng Pilipinas, cryptocurrency is a type of Virtual Currency that uses cryptography – a method of storing and transmitting data in unreadable form so that only the intended receivers can read and process it. This method allows cryptocurrency transactions to be carried out in a decentralized manner by a group of users.
Among the most popular cryptocurrencies in the Philippines are Bitcoin, XRP, Litecon, among others.
Among the many benefits of using cryptocurrency is faster and easier transactions but which are still secure because of the sequence of letters/numbers or algorithms that would make it very difficult for another person to hack your transactions.
The BSP’s Monetary Board issued Circular No. 944, Series of 2017, setting forth the Guidelines for Virtual Currency (VC) Exchanges. The guidelines provided for the definition of virtual currencies, requirements for the issuance of a Certificate of Registration for VC exchanges, technology risk management, internal control, as well as sanctions for certain violations, such as operating without prior Bangko Sentral registration, violation of any of the provisions of R.A. No. 9160 (Anti-Money Laundering Act of 2001), as amended, and its RIRR, among others.
How does cryptocurrency work?
The Bangko Sentral ng Pilipinas (BSP) provided a simplified process of how a cryptocurrency, particularly Bitcoin, works.
Basically, a user loads funds into the Bitcoin wallet set up in his computer or mobile device. After loading, the Bitcoin user can already start a Bitcoin transaction.Bitcoin miners shall validate the transaction by solving certain math problems using “private key”, “public key” and transaction message to avoid double-spending and verify the authenticity of the Bitcoin user. [BSP’s Frequently Asked Questions (FAQs) on Virtual Currencies]
What is a “public key” and a “private key”?
According to the BSP, a “public key” is a sequence of letters/numbers that everyone in the Bitcoin community can see. On the other hand a “private key” is another set of letters/numbers that is kept secret between/among the transactors. [BSP’s Frequently Asked Questions (FAQs) on Virtual Currencies]
How does the BSP regulate cryptocurrency in the Philippines?
The BSP’s Monetary Board issued Circular No. 944, Series of 2017, setting forth the Guidelines for Virtual Currency (VC) Exchanges. The guidelines provided for the definition of virtual currencies, requirements for the issuance of a Certificate of Registration for VC exchanges, technology risk management, internal control, as well as sanctions for certain violations, such as operating without prior Bangko Sentral registration, violation of any of the provisions of R.A. No. 9160 (Anti-Money Laundering Act of 2001), as amended, and its RIRR, among others.
Is it advisable to invest in cryptocurrency?
According to the BSP, due to the unpredictable price changes of cryptocurrencies, it would be best for the public to be extremely cautious when transacting with VC products in general.
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