Can the BSP safely regulate anonymity?

The Philippines may risk undermining it's own economy by lending credence to anonymous currencies, such as Bitcoin.

Strangely, the Bangko Sentral ng Pilipinas (BSP) has decided to regulate in favor of Bitcoin and other anonymous currencies, treating them as "just another way to do remittance". This suggests that the BSP sees Bitcoin and other crypto currencies merely as payment gateways, without realizing they may be opening the door to a shadow economy, capable of operating entirely beyond the purview of government.

Regulation of an anonymous currency such as Bitcoin, lends it credence and helps to remove any reticence or fear consumers and merchants may have of adopting a digital currency. Of course at first the currency will be used for remittances but that will be closely followed by payments between users and then payments to participating merchants. A tipping point is rapidly reached, where users are able to transact and pay for goods and servcies directly (P2P) without requiring Peso's or expensive exchanges at all. At this point mainstream adoption has occured, AML/CTF is circumvented and effective taxation of remittance or indeed any other income, becomes difficult, if not impossible.

Clearly the BSP does not wish to risk destabilizing their economy, let alone undermine the security of the State by rendering AML/CTF unenforceable. We therefore feel it is critical that they regulate against anonymous currencies, and instead, favor currencies which support user identification. Such currencies support AML/CTF compliance and actually streamline tax collection and increase revenues.

The contrasting outcomes of these two decisions could not be more pronounced.

China and the rest of the world are clamping down on anonymous crypto currencies for good reason. Perhaps BSP should rethink what they are doing because Pandoras Box cannot be closed once it has been opened?

Refer to BSP circular No. 454

[email protected]

©2017 thinkingactive. All rights reserved.