Senators have asked the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) to always be abreast with the latest developments on cryptocurrencies and other digital assets to encourage innovation while protecting the public from possible financial and other cybercrimes.
The lawmakers made the call during the recent hearing of the Senate committee on banks, financial institutions, and currencies, chaired by Sen. Mark Villar, that tackled up three measures filed in the chamber on digital assets, e-wallets, and other financial accounts.
Among the measures taken up were Senate Bill 336 or the proposed “Act Regulating the Use of Bank Accounts, E-wallets, and Other Financial Accounts” filed by Sen. Grace Poe; and Senate Bill 184 of Sen. Imee Marcos that seeks to recognize digital assets and institutionalizing rules for them.
During the hearing, Senators Sonny Angara and Sherwin Gatchalian raised concerns on possible criminal activities arising from the fast-growing use of e-wallets and blockchain.
Gatchalian cited his personal experience as a victim of identity theft.
“These guys know the weakness, the weaknesses of policy and regulation. So I’m just saying I just want to encourage the regulators, Mr. Chairman, to stay ahead of the curve,” Gatchalian said, adding that exploitation of e-wallets is “just the tip of the iceberg.”
“I hear some news about fake accounts, no being sold in some platforms. So the proliferation of digital accounts, fake digital accounts will be enormous. And we’d like to encourage the regulator to stay ahead of the curve because the criminals are really staying ahead of government,” the senator said.
Angara inquired about efforts to combat fraud involving digital assets, including initial coin offerings (ICOs), using existing laws and SEC Chairman Emillio Aquino responded the government implements Securities Regulation Code but new legislation to strengthen the law address such concerns are needed.
Aquino said the Philippine government considers such assets as securities that have to be registered with the SEC before they can be offered to the public.
He cited a case of the SEC issuing a cease and desist order of a Hong Kong-based company that undertook an ICO that included the Philippines.
“But what we did was to coordinate with the Hong Kong Securities and Futures Commission process of revoking the license of the Hong Kong based company,” Aquino said without naming the firm.
“How about blocking the website part? Is that part of the enforcement or preventive actions that is available?” Angara asked to which Aquino replied that the SEC coordinate with concerned agencies or foreign counterparts to undertake the action.
The official said the SEC would support the passage of a law that will provide the agency greater jurisdiction in terms of implementing the Code so it need not rely on other departments when enforcing it given the fast-changing developments in financial technology.
He said he believes the evidentiary requirements for prosecution of financial crimes would be no different from the “classic” scams like pyramiding but illegal acts are “much faster because you are tapping the virtual world in in getting hold of your potential victims.
“I agree with you that the scammers appear to be always ahead because every 24 hours of the day, probably they’re the only thing they’re thinking is to find ways on how to scam people,” he said.