Fintech Alliance.PH, the country’s leading and largest digital trade organization comprised of startups and unicorns in digital finance, recently expressed support for Senate Bill No. 184 or the “Digital Assets Act of 2022,” and Senate Resolution 126, which calls for an inquiry in aid of legislation on the status of regulations by the Bangko Sentral ng Pilipinas (BSP) concerning cryptocurrencies.
In a recent senate committee hearing chaired by Senator Mark Villar, the group said that there is now a need for the government to come up with a risk-based regulatory framework on ownership and trading of digital assets that puts consumer protection among its foremost concerns.
“The Alliance supports a risk-based regulatory regime putting consumer protection at the core. One of which is providing for mechanisms aimed at registration and regulations of emerging technologies such as digital assets,” said Lito Villanueva, chairman of FintechAlliance.Ph.
“The rules of engagement for developing technologies, including non-fungible tokens (NFTs), NFT marketplaces, decentralized finance, and exchange-traded funds (EFTs), among others, also has to be clarified better,” he added.
To further support the regulation of digital assets and the innovations for financial inclusion, Villanueva also said that the alliance is now actively engaging in constructive dialogues with the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC).
Harnessing digital assets growth and development
Senate Bill No. 184, which was filed by Senator Imee Marcos, calls for the recognition of digital assets as a valid means of transaction and investment in the Philippines with the objective of “harnessing digital assets growth, development, financial inclusion, and poverty alleviation while maintaining the stability of the country’s economy, and protecting investors and the public concerned.”
The bill also calls for stricter regulation of virtual asset businesses, giving the SEC the power to revoke their licenses and even take the necessary action against virtual asset providers who repeatedly fail to comply with regulations so as to protect the interest of its clients.
Likewise, Senate Bill No. 184 allows the SEC and the BSP (with support from the private sector and other relevant organizations like FintechAlliance.PH) to work together and implement stricter requirements for the management and licensing of digital asset exchanges in order to better protect retail investors while encouraging widespread consumer education.
Rapid use of decentralized virtual currencies in the region cited
What prompted the alliance to prioritize tougher regulation is the ASEAN region’s rapid and seemingly growing use of decentralized virtual currencies like cryptocurrencies.
According to Villanueva, there is a stark difference in how the Philippines approaches the regulation and adoption of cryptocurrency compared to our ASEAN neighbors.
Thailand was aggressive in boosting decentralized virtual currencies after it recently approved four new digital assets companies. Cambodia, meanwhile, was the first country in the ASEAN region to roll out its retail central bank digital currency (CBDC) called “Project Bakong.”
Vietnam and Indonesia are also likely to follow suit with their respective pilots.
The Philippines, meanwhile, has yet to complete the pilot testing of its Central Bank Digital Currency (CBDC), a digital currency that is centralized, issued and regulated by the BSP that can also serve as a medium of exchange or store of value. A CBDC is a stablecoin pegged to the Philippine peso.
Villanueva likewise pointed out the importance of taking into account the inherent volatility of cryptocurrencies as an asset class. “Crypto is significantly riskier for investors than shares, bonds, gold, or traditional assets due to its decentralized nature, a lack of thorough regulation, and the opaque character of many crypto enterprises,” he said.