As a developing country in the Southeast Asian region, the Philippines seemed to have trailed behind other states in terms of technological advancements in the past. Yet the turn of the decade has seen Philippines’ swift adoption of digital infrastructure towards economic progress. The International Monetary Fund (IMF) has revealed that it sees the Philippines as one of the top countries in the world that offers a good location to build blockchain and cryptocurrency projects.
The state of cryptocurrencies in the Philippines is looking brighter than ever as all the winds are blowing in the right direction – in terms of government approval and financial regulations, citizen acceptance, as well as economic factors.
The two major regulators that are keeping their eyes open and focused on this new technology are its central bank Bangko Sentral ng Pilipinas (BSP), and the Securities and Exchange Commission (SEC).
The BSP released its first advisory on virtual currencies in 2014. It informed the public about its features and risks in dealing with cryptocurrencies. After three years, on February 6, 2017, the regulator then released a circular concerning virtual currency exchanges that are more favourable towards crypto. This circular, also called BSP Circular 944, listed the licensed companies that are allowed to legally exchange fiat to crypto and vice versa.
The number of approved cryptocurrency exchanges has been growing in the Philippines ever since. In addition to the operators registered by BSP, there are other crypto exchange operators licensed by the government-owned Cagayan Economic Zone Authority (CEZA).
According to the BSP, the value of virtual currency transactions in the Philippines doubled in 2018 to $390.37 million from 2017’s $189.18 million. Many of the virtual currency exchanges based in the Philippines, particularly in Manila, have been established by international players in financial technology such as Atomtrans Tech Corp. International, which also established offices and expanded its business to Singapore, Hong Kong, Japan and Argentina. It is also exclusively representing Philippines-China remittance products.
Most of the local population have become more aware of virtual currencies, even if many have expressed concern over the risks and withhold their investments in digital assets. Moreover, the BSP also encourages a careful stance towards the adoption of digital assets due to the security risks which physical banking systems might face with the lack of safeguards. Virtual exchanges could also potentially be utilised for illegal activities such as money laundering and funding terrorism.
Such risks bring Filipinos towards traditional investments such as equities, but the use of virtual currency is still rising in popularity in the Philippines. Besides the start-ups eyeing cryptocurrency to raise capital through Initial Coin Offering (ICO), virtual currency also gives consumers a new option for making payments since 7 in 10 Filipinos have no bank accounts. For overseas Filipinos sending money home, cryptocurrencies offer a cheaper and quicker way to move cash.
Cryptocurrency investment app Abra started selling crypto for cash in 6,000 retail outlets across the Philippines, including all 7-Eleven stores, with a new partnership with payment processor ECPay last September. Users can then deposit the money into their Abra wallet which allows them to do bank transfers and cryptocurrency buying and selling.
Strong Economic Stimulus – The Crypto Valley of Asia
About 400km northeast of Manila, excitement has been building up for investors from Asia and the rest of the world. The Philippines government-owned CEZA has partnered with Northern Star Gaming & Resorts Inc. to develop a crypto and fintech hub called the Crypto Valley of Asia (CVA). CVA is expected to catapult the economic zone into a technological garden for the world’s next wave of ground-breaking financial technology innovations. Its ultimate goal is to stimulate the local economy and allow more Filipinos to pursue careers in technology.
To further boost the conditions for the growth of the CVA, an airport to further enhance the infrastructure has been planned for inside this economic zone to address the needs of its investors and crypto service providers. This initiative will foster an ecosystem to attract international companies to the Philippines. With more than 40 cryptocurrency exchanges licensed to operate within the zone, conditions are indeed inviting for businesses to venture towards the CVA.
Treading With Caution
As the use of cryptocurrencies in the Philippines continue to rise, its officials warned over the risks it might bring to the country, especially given the technology’s potential use in the funding of terrorism. The BSP also stressed that cryptocurrencies are not recognised or classified as legal tender, and that they will continue to closely monitor their use in the country.
Along the same line, it is also crucial for investors to be aware of the high possibility of fraud in the market, with law enforcement actively pursuing those behind scams. Such illegal activities which take advantage of the lack of education or miseducation on cryptocurrency could affect both the local and even international investors. Thus, there is a need for proper education on the potential risks of keeping, trading, and investing in digital assets.
Partnering Towards Crypto Success in the Philippines
Presently, there are more opportunities granted to offshore companies to operate virtual currency exchanges than local ones. As such, the Philippines delivers a promising environment in the ASEAN region for those investing and innovating competitively in this market.
Desfran’s team of professional consultants can help you with your offshore banking solutions in the Philippines and other ASEAN regions like Indonesia, Thailand, Vietnam and Singapore. We stay on top of trends and movements in various markets to help our partners know and pursue their options for growth. Contact us today.
48 Crypto Exchanges Approved in the Philippines, Bitcoin.com
BSP approves 2 more VC exchanges. Philstar.com
Cryptocurrency In The Philippines: Rise Of the Digital Asset, AsiaBlockchainReview.com
Why Cryptocurrency Is Gaining in the Philippines Despite 2018 Bitcoin Crash, voanews.com
“Awareness in PH on cryptocurrency high but high risks keep investments low,” says the report, Inquirer.net
Philippines Central Bank Warns on Risks of Growing Cryptocurrency Use, Coindesk.com
Report: Philippine Police Raid Alleged Cryptocurrency Scam, Arrest 277, CoinTelegraph.com
CEZA’s Crypto Valley of Asia, is a haven for foreign investors, South China Morning Post
Philippines Emerging as Asia’s Sandbox for Blockchain, ConsenSys Executive Says, cryptovest.com
All 7-eleven Stores Across the Philippines Now Sell Bitcoin, cointelegraph.com
Philippines Building Crypto Valley of Asia, bitcoin.com
Philippine ‘Crypto Valley of Asia’ to Get Own Airport, bitcoin.com
Buy Bitcoin in the Philippines from top Cryptocurrency Exchanges, steemit.com
IMF Sees PH Potential as Key Market for Cryptocurrency, Other Internet-based Wealth, business.inquirer.net