THE CENTRAL BANK warned the public that illicit financial activities may occur through “play-to-earn” online games, even as it recognized such platforms have the potential to boost financial inclusion and digital payments in the country.
“The Bangko Sentral ng Pilipinas (BSP) advises those engaging in these games to be thoroughly aware of how these work as the digital space provides a borderless and wider playing field for fraudsters or cyber criminals to carry out illicit financial activities,” it said in a note sent in response to a query.
Earlier, the BSP noted that Axie Infinity, a play-to-earn online game that has become popular among Filipinos, is not yet registered with regulators, although it is keeping a close eye on its activities which are similar to an operator of a payment system.
Axie Infinity allows players to earn smooth love potion (SLP) by completing various quests through the game. BSP Director for Technology Risk and Innovation Supervision Department Melchor T. Plabasan has earlier said they are still looking at SLP as a payment scheme in a case when more merchants start accepting the virtual currency.
In its note, the BSP said users should exercise caution in participating in these play-to-earn games as there is a potential for abuse.
“Digital gaming token transactions have high degree of anonymity and are not subject to Know Your Customer policies,” it said.
The BSP warned that such activities are vulnerable to hacking, theft, and cyber threats given it involves virtual assets.
It also cautioned users about the difficulty in filing complaints in cases of unauthorized or fraud transactions given there is no central authority that guarantees such digital tokens.
The central bank also said digital tokens are generally volatile given they are subject to speculations.
“In such cases, end-users will have to bear the risk of losses and the lack of legal protection,” the BSP said.
The BSP said it has been working closely with other regulators including the Securities and Exchange Commission (SEC) in order to develop a coordinated approach in dealing with emerging trends on virtual assets or cryptocurrency, including play-to-earn games. It also acknowledged that these digital games may also be helpful in achieving the central bank’s aim to increase digital payments in the country.
“When harnessed in a responsible manner, these innovations have the potential to contribute to the BSP’s mutually reinforcing goals of financial inclusion and payments digitalization by increasing the awareness and familiarity of Filipinos on the use of digital platforms,” it said.
Registered virtual asset service providers are required by the BSP to conduct background checks on customers in order to boost financial consumer protection.
Filipinos have flocked to games such as Axie Infinity as it is another way to earn at a time of income losses during the crisis, Swarup Gupta, an industry manager at The Economist Intelligence Unit said.
“Unemployment will remain markedly above pre-pandemic levels until at least late 2022 which means that many more individuals will be drawn into the play-to-earn arena in a country with a reasonably high level of mobile phone ownership and internet access as well as a young and tech-savvy population,” Mr. Gupta said in an e-mail.
Given this development, Mr. Gupta said it is crucial for regulators like the BSP and SEC to raise awareness regarding risks related to dealing with virtual assets.
He said regulatory approach should keep up as cryptocurrency continues to gain traction.
“The SEC and the central bank need to usher in comprehensive legislation to regulate virtual assets and cryptocurrency and ensure that norms applicable to such operators are as stringent as those that financial companies have to abide by,” he said. — Luz Wendy T. Noble