The Insurance Commission (IC) of the Philippines warned insurers, pre-need companies, health maintenance organisations (HMOs), mutual benefit associations, brokerages and agencies, as well as the public about the risks of engaging in digital currency transactions, particularly when used as an investment vehicle.
In an advisory notice posted on the IC's website, Insurance Commissioner Dennis Funa said his office “does not, directly or indirectly, recognise cryptocurrencies as a viable investment or a medium of exchange involving any and all insurance, pre-need or HMO-related transactions.”
He added that while the agency recognises the value of technology in promoting the ease of doing business, the nascent cryptocurrency technology can also be used by criminals in illegal activities such as money laundering, fraud, scams, and terrorism financing.
“Further, cryptocurrencies are neither issued nor guaranteed by any government. Consequently, its value is purely dependent on market demand and supply, which makes it highly speculative and not suitable for investment.”
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He advised potential crypto traders to educate themselves on the matter and keep abreast of the various rules and regulations issued by the supervisory bodies involved in cryptocurrencies, including the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC).
Mr Funa added, “At any rate, the Insurance Commission judiciously considers the disruptive innovation brought by cryptocurrencies and will issue appropriate regulations, as far as the insurance, pre-need and HMO industries are concerned, if and when warranted.”
Early this year, Hong Kong’s Securities and Futures Commission (SFC) also issued a statement alerting investors to the potential risks of dealing with cryptocurrency exchanges and investing in initial coin offerings (ICOs). It was not the first time the SFC had warned of cryptocurrency risks.
Monetary Authority of Singapore and its Financial Technology (Fintech) Chief Sopnendu Mohanty had also advised the public to act with extreme caution and understand the significant risks they take on if they choose to invest in cryptocurrencies.
In South Korea, officials sounded caution about the bitcoin frenzy that is luring not just seasoned investors, but ordinary people with little prior experience in virtual currencies, with its soaring price. South Korean Prime Minister Lee Nak-Yeon expressed concern after a cabinet meeting where he said that cryptocurrencies are causing speculation that can create a “pathological social phenomenon” if not addressed.
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