Cryptocurrency-related scams are proliferating at an alarming rate in the Philippines. As the popularity of cryptocurrencies and blockchain technology continues to surge, scammers are shamelessly taking advantage of the nation’s limited understanding of crypto. They employ various deceptive tactics such as questionable coins, misleading non-fungible tokens, and Ponzi schemes disguised as innovative investment strategies. Their primary targets are individuals, especially those who are new to the technology, whom they successfully deceive.
Recent high-profile incidents, covered extensively in the news, include the arrest of an individual known as the “crypto king” for a ₱100 million (US$1.8 million) scam, as well as charges pressed by local artists against Cronus Holdings Corporation for an ₱8 million (US$141,000) fraud.
In a troubling twist, some scams have even involved Filipinos in their illicit operations. The scale of these fraudulent activities has caught the attention of the Senate. In November 2022, a network of non-governmental organizations rescued 12 Filipinos who were coerced by an alleged Chinese criminal syndicate into soliciting online investments for fraudulent cryptocurrency websites.
This backdrop paints a concerning picture, positioning the Philippines as the second most targeted country in Southeast Asia for crypto phishing attacks last year. Recognized cybersecurity firm Kaspersky has identified gaming platforms and cryptocurrency wallets as the primary hotspots for these illicit activities. This information is particularly significant considering the country’s previous reputation as a top user of blockchain games like Axie Infinity.
However, a noticeable shift has occurred. Data from blockchain intelligence firm Chainalysis reveals that the Philippines has dropped from second to sixth place in global crypto adoption this year. While industry leaders and pioneers maintain an optimistic outlook, this decline can be attributed to various factors, including increased competition from emerging nations that are aggressively adopting blockchain technology. Nevertheless, the impact of these scam stories, which sow fear and mistrust, undoubtedly played a significant role in this shift. This narrative underscores the urgent need for heightened awareness, education, and protective measures within the cryptocurrency landscape.
Importance of Enhancing Financial Literacy
Financial literacy is an important life skill among many others. Unfortunately, many investors today make decisions based on limited and superficial indicators, often resulting in severe consequences for their financial portfolios and overall well-being. Despite the increasing adoption of cryptocurrencies, the crypto landscape remains filled with fear, uncertainty, doubt, and, most significantly, misinformation.
For numerous Filipinos, the allure of investing in cryptocurrencies lies in the promise of high returns. However, they often get blindsided by their pursuit of quick and substantial profits, neglecting the crucial step of due diligence. It is a well-known principle that high rewards come with high risks.
Another cause for concern is the reliance on social media as the primary source of cryptocurrency information, including news, discussions, and insights from experts and influencers. This not only amplifies the influence of digital platforms in shaping perceptions but also emphasizes the importance of discerning credible sources from mere noise.
On the other hand, individuals who hesitate to invest in cryptocurrencies often cite a lack of knowledge and understanding as their main barrier. Others, while somewhat familiar, remain hesitant due to the inherent risks associated with the volatile and unpredictable nature of the market.
These attitudes and behaviors need to be examined within the broader context of the nation’s financial literacy, or rather, the lack thereof. The Philippines ranks among the bottom 30 out of 144 countries in terms of financial literacy, according to a global study conducted by S&P Global Ratings. This challenge is further compounded by the fact that only 2% of Filipino adults are able to pass a basic financial literacy test, as revealed by a survey conducted by the country’s central bank in 2021.
This unsettling reality underscores the immediate need for comprehensive financial and crypto education, particularly as we navigate the complex financial innovations of our time.
Crypto education for the future
Financial literacy goes beyond mere understanding of money; it encompasses empowerment. Its purpose is to equip individuals with the knowledge necessary to differentiate genuine opportunities from momentary hypes.
In a country where cash is becoming less prevalent, we must update the methods used to impart financial wisdom. Traditional lessons about savings and piggy banks are no longer sufficient. We need a modern approach that aligns with the current financial landscape.
Interestingly, there is a noticeable eagerness among Filipinos to learn more about cryptocurrencies. They are keen to expand their knowledge of various digital assets, decipher the investment process, and potentially enter the market. Some are also interested in exploring practical applications, real-world examples, and use cases, indicating a broader interest beyond monetary gains.
Just as the early 2000s witnessed a transformative leap towards online connectivity, we find ourselves at a similar pivotal point. Cryptocurrencies are leading us towards a future dominated by the digital realm, with careers centered around blockchain and crypto. It is crucial that we prepare and equip ourselves for what lies ahead.
Obtaining credible information about cryptocurrencies between 2014 and 2018 was akin to navigating a maze, with valuable sources scattered across various forums. However, times are changing. Major fintech leaders have recognized the knowledge gap and are actively introducing cryptocurrency courses to their users. Grassroots educational platforms now offer teachings in local dialects, making information more accessible. The emergence of events like the Philippine Blockchain Week and educational caravans signifies a collective effort to educate the masses.
Furthermore, it is increasingly important to enhance the crypto literacy of regulators. In a proactive move, the Philippine government has initiated advanced sessions for its officials. The country’s Securities and Exchange Commission has released a draft proposal for a Regulatory Sandbox Framework, aiming to promote technological innovation in the financial services sector. Public feedback has also been sought. The choices made by regulators, especially without a deep-rooted comprehension, have the potential to influence public trust in this rapidly growing sector.
The urgent need for crypto investment literacy extends beyond staying updated; it is about safeguarding the nation’s financial future. The mantra “Do Your Own Research” (DYOR) reflects the fundamental ethos of the cryptocurrency realm, but it is not enough. It is essential to be proactive, combining analytical thinking with anticipatory action, and adopting a forward-looking mindset.