“The only reason you’re using this [cryptocurrencies] is you think somebody else will buy it from you at a higher price. That’s a very scary investment,” the future central bank chief told Business World.
Cryptocurrencies are based on the greater fool theory, which suggests that a trader can earn profits irrespective of the buying price if there’s a “greater fool” willing to buy it, Medalla said.
Medalla also said that cryptocurrencies serve as a tool for those seeking to “hide their money from the government.”
Bangko Sentral ng Pilipinas (BSP) does not regulate cryptocurrency itself but has set guidelines for virtual asset service providers who need a license from the central bank to operate.
The BSP is currently working on a pilot wholesale central bank digital currency project called CBDCPH, to test the CBDC’s feasibility for large-value transactions between select institutions.
In Chainalysis’ Crypto Adoption Index 2021, the Philippines ranked 15th in terms of digital asset adoption, while BSP data indicates that cryptocurrency investments surged 71% to nearly US$2 billion in the first half of 2021.