There are many reasons why the Philippines is becoming even more crypto-friendly. Not only has the country’s central bank continued to register crypto exchanges, but its Securities and Exchange Commission has issued some crypto-related guidelines for digital asset exchanges. There is also an active crypto community in the country, and one of its largest banks has launched its own stablecoin.
Also read: G20 Leaders Issue Declaration on Crypto Assets – A Look at Their Commitments
More Licensed Crypto Exchanges
The Philippines currently has 13 registered crypto exchange service providers. The central bank of the Republic of the Philippines, the Bangko Sentral ng Pilipinas (BSP), has registered Betur Inc. dba Coins.ph, Rebittance Inc., Bloomsolutions Inc., Virtual Currency Philippines Inc., Etranss Remittance International Corp., Fyntegrate Inc., Zybi Tech Inc., Bexpress Inc., Coinville Phils Inc., Aba Global Philippines Inc., and Bitan Moneytech Co. Ltd.
The BSP adopted a formal regulatory approach to cryptocurrency through the issuance of Circular No. 944 back in 2017. It requires businesses engaged in the exchange of cryptocurrencies for fiat money in the county to register with the central bank as remittance and transfer companies.
Among the registered companies is Rebittance Inc., a wholly owned subsidiary of Satoshi Citadel Industries (SCI), a fintech company building the blockchain ecosystem in the Philippines. SCI co-founder Miguel Cuneta told news.Bitcoin.com that besides the 13 companies:
Many are still in the process of applying for one.
In addition, the Philippines has a special economic zone where many overseas crypto exchange operators have been licensed to operate. The Cagayan Economic Zone Authority (CEZA) revealed in June that it had licensed 37 crypto exchange operators. CEZA has been building Crypto Valley of Asia for companies operating in the Cagayan Special Economic Zone and Freeport in collaboration with property developer Northern Star Gaming and Resorts.
Growing More Crypto-Friendly
Cuneta told news.Bitcoin.com that he believes “The Philippines has always been one of the most crypto-friendly countries in the world,” highlighting several factors.
Firstly, he said the Philippines is “one of the first in the whole world” where the central bank registers companies wanting to provide crypto services using cryptocurrency. The BSP started registering crypto companies in 2017, the same year Japan’s top financial regulator, the Financial Services Agency (FSA), began registering Japanese crypto exchanges. So far, the FSA has registered 19 operators to legally operate crypto exchanges in the country. Cuneta added:
We also now have new draft guidelines from our own SEC on ICO fundraising and order-book exchange regulations, paving the way for a more mature ecosystem with our own crypto marketplace for local price discovery.
The SCI co-founder additionally noted that there is “an active community and active meetup groups established since 2014” in the country, as well as referencing CEZA which “allows overseas crypto companies to register and cater to offshore customers.” After conveying various reasons for the crypto savvy image of the country, he concluded that “Definitely, the Philippines is becoming more and more crypto-friendly.”
Luis Buenaventura, founder and chief strategy officer at Bloomsolutions Inc., shares a similar sentiment. Emphasizing that “The Philippines is one of the most crypto-friendly countries in the world,” he shared with news.Bitcoin.com: “Not only do we have an actual regulatory framework for crypto exchanges, but we’re also a predominantly English-speaking population that can use all the same tools and apps as North American or European audiences with minimal localization. Thus we tend to be a launchpad for US startups looking to expand in the region.”
As an example, he mentioned popular mobile bitcoin wallet and investing app Abra. The company has been offering its crypto-to-fiat conversion network in the Philippines since 2016, trialing it in the country first, before expanding to others. Many Filipinos are also trading bitcoin cash on Bitcoin.com’s peer-to-peer marketplace.
Crypto Adoption Advancing
There are approximately two million people in the Philippines who have had some exposure to crypto, Buenaventura estimates, including those “caught up in the buying frenzy of late 2017.” He further shared with news.Bitcoin.com:
We have a fairly sizable expat population, mostly Koreans, Chinese, and Japanese so there’s a lot of cross-pollination when it comes to financial technologies and payment systems.
Cuneta also believes that crypto adoption is growing in the Philippines, “at least in terms of the number of on-ramps and off-ramps we have for bitcoin and other cryptocurrencies in the country,” he explained. “You can send money, pay bills, buy phone credits, and exchange crypto to fiat using several central-bank licensed exchanges and service providers.”
The SCI co-founder proceeded to state that “Banks and other business are also more comfortable working with companies that are licensed by the central bank, unlike when we were starting out in 2014 and banks would just shut down our accounts as soon as they found out we are dealing with bitcoin.” He elaborated, “In terms of user adoption, we see more sophisticated and knowledgeable users, traders, and enthusiasts as compared to the speculative mania of 2017.”
While expressing that “Bitcoin-as-retail-payment has never caught on here,” Buenaventura opined:
Less than 2% of payments in the Philippines happens digitally so the importance of creating cash-to-crypto bridges can’t be overstated.
Stressing the growing number of locations where “people can actively exchange physical cash for crypto,” he said that his company “powers about a dozen physical locations, and they’re all licensed FX outlets, and we’re aiming to be in 50 by the end of the year.”
Unionbank Launches Own Crypto
The Union Bank of the Philippines (Unionbank), one of the largest banks in the country, has engaged in a couple of crypto projects. Following the installation of a bitcoin ATM at its branch in Makati called The Ark, the bank has reportedly launched a stablecoin.
The Philippine Star reported on July 26 that Unionbank had issued “a stablecoin dubbed PHX and became the first bank in the country to conduct transactions using the blockchain technology.” This stablecoin is not to be confused with the Red Pulse Phoenix coin which uses the same symbol. Unionbank backs the value of its stablecoin, which is guaranteed to be at parity with the Philippine peso at all times, the publication conveyed.
Unionbank senior vice president and head of the fintech business group Arvie de Vera revealed that live PHX transactions were implemented on the i2i platform. Project i2i, which stands for island-to-island, institution-to-institution, and individual-to-individual, is Unionbank’s clearing system that connects rural banks through blockchain technology. Three banks participated: Summit Rural Bank in Luzon, Progressive Bank in Visayas and Cantilan Bank in Mindanao. Each performed buy, transfer, redemption transactions and domestic remittances using the stablecoin. Initially, PHX is available to i2i participants and can be purchased by debiting from their Unionbank accounts. It can also be redeemed for pesos, credited directly to participants’ accounts. According to de Vera:
PHX is a stable store of value, medium of exchange and is a programmable token with self-executing logic. It enables transparent and automatic execution of payments.
SEC’s Rules on Digital Asset Exchanges
The Securities and Exchange Commission (SEC) of the Philippines has published a document entitled “Rules on Digital Asset Exchange,” which primarily governs the registration and operations of digital asset exchanges accessible in or from the Philippines.
The document has 10 articles covering areas such as registration requirements, anti-money laundering measures, as well as powers and responsibilities of digital asset exchanges. Among responsibilities of digital asset exchanges are the capitalization maintenance requirements. “The digital asset exchange shall maintain the unimpaired paid-up capital of one hundred million pesos (Php 100,000,000.00 [~$1,912,450]) at all times such capital in a form, and amount as the Commission determines is sufficient to ensure the financial integrity of the digital asset exchange and its operations,” the SEC document details.
Stakeholders, exchanges, broker-dealers, investment houses, the investing public, and other interested parties had until Aug. 14 to submit their views, comments, and input regarding the proposed rules.
What do you think of the Philippines’ crypto ecosystem? Let us know in the comments section below.
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