By DALE LUMA
BANK South Pacific (BSP) does not accept cryptocurrency transactions, says group chief executive officer Robin Fleming.
Responding to queries from The National, Fleming highlighted that cryptocurrencies posed some risks which included:
- LACK of consumer protection. While traditional financial products have strong consumer protections in place, there is no intermediary with the power to limit consumer losses if bitcoins are lost or stolen.
One of the features cryptocurrency lacks in comparison to credit cards, for example, was consumer protection against fraud, such as chargebacks; and,
- VOLATILITY. Cryptocurrencies are generally 10 times more volatile than traditional foreign exchange markets (can go up or down 10 times as far or as quickly as traditional foreign exchange markets).
“BSP does not accept cryptocurrency transactions as they are pseudonymous rather than anonymous in that the cryptocurrency within a wallet is not tied to people, but rather to one or more specific keys (or ‘addresses’),” Fleming said.
“Thereby, cryptocurrency owners are not identifiable, but all transactions are publicly available in the blockchain.
“Hence, proceeds of crime, tax evasion funds, counter terrorism financing and funds from internationally sanctioned countries are easily washed anonymously through cryptocurrency exchanges.
“While cryptocurrencies are digital currencies that are managed through advanced encryption techniques, many governments have taken a cautious approach toward them, fearing their lack of central control and the effects they could have on financial security.
“Regulators in several countries have warned against cryptocurrency and some have taken concrete regulatory measures to dissuade users. Additionally, many banks do not offer services for cryptocurrencies and can refuse to offer services to virtual-currency companies.”
Fleming said the legal status of cryptocurrencies varied substantially from country to country and was still undefined or changing in many of them.
“While some countries have explicitly allowed their use and trade, others have banned or restricted it,” he said.
“It remains unlikely PNG will use cryptocurrencies.”
The Bank of PNG has released a public notice warning the public that “cryptocurrencies are not currencies issued or regulated by the Central bank”.