Asia is arguably the strongest blockchain region in the world, with countries like Korea (where 20% of all daily cryptocurrency trading volume now comes) and China leading the way in cryptocurrency innovation and high-profile token sales.
Not far behind is the Philippines, which, according to an industry expert, now has the potential to become Asia’s blockchain capital. Blockchain is defined as “a digital database that contains information, such as records of financial transactions, which can simultaneously be used or shared within a large decentralized, publicly accessible network.”
According to Donald Lim, chief operating officer of Dito CME and who is also considered the father of digital marketing in the Philippines, we have the numbers to become a hub for blockchain technology.
“Our population is at 110 million, with a median age of 25,” Lim said. “We also have the highest internet penetration and the highest NFT penetration rate of a digital population.”
Seeing this opportunity for blockchain technology, the Department of Science and Technology (DOST) recently started a training program for blockchain technology as the agency explores test use-cases of blockchain technology for healthcare, emergency aid, financial support, issuance of visas and passports, trademark registration, and government record storage.
Tracing crypto adoption in the Philippines
In the early years of crypto, investing in virtual currencies had been very difficult.
Early crypto adopters in the Philippines shares that they had to buy and sell crypto using foreign crypto exchanges such as Mt. Gox and Bitstamp, and then claim the free Bitcoins through faucet websites.
It wasn’t until 2014, with the entry of Coins.ph, a blockchain-backed platform that provides consumers with direct access to local and international banking and digital payment services, that Filipinos were able to find a vehicle to use crypto in making everyday financial transactions like payments, remittances, and online shopping.
It also allowed Filipinos to make quick cross-border payments, which has proven to be too challenging to accomplish traditionally because of their tax implications, complicated processes, and high transfer fees.
Crypto adoption in the country has since increased over the years, albeit at a slower pace than expected, as crypto was still considered a risky investment and existing regulations did not cover virtual currencies.
Mainstream crypto solutions are now being launched in PH
Beginning in 2019, a number of local financial institutions started introducing more mainstream crypto solutions for Filipinos.
UnionBank, for instance, rolled out the first crypto ATM in the Philippines to help its customers exchange virtual currencies for cash as well as buy or sell crypto on the spot. The bank also introduced its stablecoin called PHX to help rural banks access remittance and payments under its blockchain-based i2i network.
At about that same year, Filipino crypto holders were also given permission to sell cryptocurrency for cash through 7-Eleven stores located all over the country. The ploy was part of an initiative of Abra, a crypto investment app, and payment processor ECPay, to make the acquisition of cryptocurrency easier.
By 2020, Filipinos were finally able to access 16 cryptocurrency exchange service providers approved by the BSP, including PDAX, which has been making waves in the crypto scene in the country since 2017. More than just being a provider of crypto trading services, PDAX has also since been collaborating with industry leaders to foster the growth of the blockchain and crypto community in the Philippines.
Investing in virtual currencies in PH
Upon seeing the growth of crypto adoption in the Philippines, the Bangko Sentral ng Pilipinas (BSP) thus issued an advisory informing Filipinos of the features, benefits, and attendant risks when dealing with virtual currencies.
The advisory read: “It has come to the attention of the Bangko Sentral ng Pilipinas that virtual currencies like Bitcoin are now being exchanged in the Philippines. The public is hereby warned that such exchanges are not regulated by the BSP or by any regulatory authority in the country at this time.”
“Thus, there are no existing regulations that would specifically protect consumers from financial losses if an organization that exchanges or holds virtual currencies fails or goes out of business. Moreover, there is no assurance that the value of Bitcoin or any virtual currency will be stable. In fact, its value can be highly volatile,” the advisory continued.
Bitcoin quickly rose in popularity in 2017 when its value jumped from US$1,000 to over US$19,000 in just a few months.
At around that same time, the BSP started requiring crypto exchanges to register with them as remittance and transfer companies and to put adequate safeguards to address the risks associated with crypto.