BOJ warns against use of virtual currencies for economic transactions

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BOJ warns against use of virtual currencies for economic transactions

Monday, February 05, 2018

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KINGSTON, Jamaica — The Bank of Jamaica (BOJ) said it is aware of reports of investments in virtual currencies and the use of these types of instruments for the settlement of economic transactions.

“In light of these reports, the bank is advising the public to exercise caution in the use of virtual currencies (cryptocurrencies) given the associated risks and the absence of appropriate governance and consumer protection arrangements,” said BOJ in a release today.

A virtual currency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

The bank said while it is committed to the process of facilitating the enhanced use of technology in the provision of financial services, it wants to also “preserve the financial and payment system stability.”

BOJ noted that although virtual currencies with blockchain as the underlying technology may have benefits, such as the potential to promote financial inclusion, the following risks need to be taken into consideration:

1. Virtual currencies are not legal tender in Jamaica.
2. Bank of Jamaica neither issues nor backs virtual currencies.
3. Virtual currencies are not foreign currencies as there is no monetary authority that issues or backs them.
4. Bank of Jamaica does not regulate or supervise virtual currencies.
5. Bank of Jamaica has not authorised any entity to operate a virtual currency platform.
6. Transactions in virtual currencies, such as bitcoin, are susceptible to abuse by criminals and may facilitate money laundering and the financing of terrorism.

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