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July 2, 2018

CRYPTOCURRENCY: A FASTER WAY OF REMITTANCE FOR OFWS

The use of cryptocurrency can be advantageous to Filipino overseas Filipino workers who choose to use this as a means to send their remittances to the Philippines.
This was the analysis shared by Mr. Diwa Gunigundo, Deputy Governor of the Central Bank of the Philippines or Bangko Sentral ng Pilipinas (BSP) in our interview with him on our television program Kasangga Mo Ang Langit (aired on PTV 4 every Friday at 10:00 p.m.).
Rey Langit, BSP Deputy Governor Diwa Gunigundo, JR Langit, Bangko Sentral ng Pilipinas, Philippines, Central Bank

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Gunigundo with author Rey Langit and JR Langit

Gunigundo admitted that because of the technology used for cryptocurrencies, payments can be facilitated faster.
“In fact in other countries, the banking system is bypassed altogether because the principle behind cryptocurrencies is decentralization,” Gunigundo said. “When banks are involved, banks settle transactions at the end of the day through deposits with the Central Bank so (the process) will take time but with the cryptocurrency system, payments can be made through the distributed ledger technology … then payments can be settled among yourselves.”
NEITHER LEGAL NOR ILLEGAL
As of today, the use of cryptocurrencies is neither legal nor illegal in the Philippines.
“You cannot say whether it is legal or illegal because we do not have a law on cryptocurrency,” Gunigundo clarified, saying transactions using cryptocurrencies are simply to be considered private transactions among individuals who determine among themselves the value of the cryptocurrency.
Gunigundo emphasized, though, that the BSP had already issued a March 2014 advisory clarifying what is a bitcoin and a Circular 944 was issued last February 2017 recognizing virtual money. “It’s a private ecosystem, so to speak,” Gunigundo said, .”you agree, using the same technology, your own language.”
It is, however, very difficult to regulate. “Paano mo ngayon mapangangasiwaan ang sistema ng pananalapi kung hindi mo alam ang total volume of liquidity or money supply sa merkado dahil yung isang component ng money supply mo akyat baba ang value (How will you create a treasury system when you do not know the total volume of money supply because the values are erratic?)” Gunigundo explained.
 
OFW REMITTANCES THROUGH BLOCKCHAIN TECHNOLOGY
 
Korean cryptocurrency companies believe that this new way of transferring money can really help Filipino OFWs.
First of all, it eliminates or at the very least greatly reduces the commission deducted by pawnshops, which is the preferred means for remittances of many OFWs.
Secondly, it is safe. Justin Jung, Vice Chairman of Sapphire Technology Co., through his interpreter Ryan, guaranteed to us that using the blockchain is 100% safe. (A blockchain is a public ledger of all Bitcoin transactions.) “If they are using the proper blockchain system, it is safe; it is not scam,” Jung said, “We use an authentication process for each customer.”

 

Rey Langit, JR Langit, Sapphire Tech, Director Hee Seong Lim and Justin Jung, Vice Chairman of Sapphire Technology Co

Rey Langit and JR Langit with the executives of Sapphire Technology

POTENTIAL MARKET
Hee Seong Lim, Director of Sapphire Technology, believes the Philippines is a market with great potential for cryptocurrency.
Lim explained that they now offer both mobile to mobile and software to software transactions and soon will be offering I to I, i.e. island to island or institution to institution possibilities for cryptocurrency. OFW remittances can now be sent through cryptocurrency but withdrawn from ATMs in the Philippines although access is still limited in the provinces where there are less ATM machines.
I am amazed that while virtual cryptocurrency is not something you can physically mine, and while it is not cash, it is fast becoming something that many of us can use for our purchases and transactions.
Although, the BSP is right, we must proceed with caution. After all, we want to take good care of our hard-earned money.
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