The central bank of the Philippines is about to go “hard” on operators and exchanges involved with digital currency in the country.
A senior official of the Bangko Sentral ng Pilipinas (BSP) revealed it is looking into fortifying its cybersecurity surveillance as well as regulating bitcoin operators to curb money laundering activities.
Nestor Espenilla, BSP’s deputy governor in charge of banking supervision, told local media outlets regulators observed a “sizable spike” in flows of virtual currency, particularly bitcoin. Between $2 million to $3 million in transactions involving bitcoin were reported per month, according to Espenilla.
The official admitted that BSP—the sole authority that can issue money in the Philippines—has yet to regulate cryptocurrency, but he stressed that “given the increasing volumes that are being reported, we are now that much closer to formally regulating virtual currencies.”
So far, the central bank already has a core cybersecurity surveillance division set up to form “policies and conduct surveillance work, monitor cyber threats and test the ability of supervised institutions to manage cyber security issues.”
Recently, the government canceled the money transmitter license of Philrem Service Corporation, the remittance company linked to the $81 million stolen from the Bangladeshi central bank accounts—an accusation Philrem has denied to this day.
Another factor that may have jolted the central bank into stepping up its cyber security efforts is the recent Swift hacking saga, which include the now-infamous Bangladeshi cyber heist, an attempted wire fraud in Vietnam’s Tien Phong Bank, and the missing $9 million from the Banco del Austro in Ecuador.
Last week, Swift Network CEO Gottfried Leibbrant warned that banks with inadequate cyber defenses could be booted off the payment network. In an interview with Financial Times, Leibbrant unveiled a five-part plan that calls for the 11,000 banks in its network to step up their security game.
“We could say that if the immediate security around Swift is not in order we could cut you off, you shouldn’t be on the network,” the executive told the news outlet.
Unlike traditional banks, whose outdated computer systems make them vulnerable to even a power interruption, bitcoin’s underlying technology—the blockchain—uses SHA-256 encryption for both its Proof-of Work (PoW) system and also to verify all transactions.
The price of bitcoin reached a high $590.49 before lunchtime on Tuesday, with 79.07 million bitcoins in circulation.