Considering that Bitcoin had a value of over $19,000 in 2017, it is no wonder that everyone wants to profit from it, including banks and governments. Many technology publications have labeled the Philippines as one of the most crypto-friendly countries in the world. On a regulatory front, the Phillipine government has recognized cryptocurrency as legal tender, while the apex monetary regulator (Bangko Sentral ng Pilipinas) had by the end of 2018 registered 16 accepted cryptocurrency exchanges, whilst also engaging in many crypto projects via regulatory sandbox and searches for ways to improve the service for the people.

The Regulatory Environment

In February 2019, the country unveiled more crypto related regulations dealing with the acquisition of cryptocurrencies, including security tokens and utility. The Cagayan Economic Zone Authority (CEZA) is a government-owned and controlled corporation (GOCC) tasked to manage and supervise the cryptocurrency space in the Philippines. It aims to promote innovation, regulate the industry, and safeguard the interest of investors at the same time.

These regulations, known as the Digital Asset Token Offering (DATO) regulations, require initial coin offerings (ICOs) in the Philippines to provide clarity with respect to the project, the issuer, and expert certification. The ICOs will be listed on a special exchange, and the participants need to partner with accredited custodians and wallet providers.

According to Raul Lambino, the CEO of CEZA, the aim is to provide a clear set of rules and guidelines that will boost innovation while ensuring proper compliance by actors in the ecosystem. According to him, this set of regulatory innovations will promote blockchain and crypto adoption by institutional investors and the financial system.

Buying and Spending Cryptocurrency in the Philippines

Even though the Philippines’ regulatory authority has awarded licenses to several cryptocurrency exchanges. The exchanges differ based on several criteria, such as transaction fees, withdrawal limits, payment modes, verification requirements, reputation, amongst many.

In the Philippines, cryptocurrency can be bought through registered exchanges and also via automated teller machines (ATMs). One of the Philippines’ largest commercial banks, the Union Bank of the Philippines, had unveiled the country’s first cryptocurrency ATM in 2019. It is a two-way ATM that allows users to convert fiat currency into cryptocurrencies and vice versa. However, only one crypto ATM is available, though the bank intends to roll out more units based on demand.

Growing Role of Government

Blockchain technology and cryptocurrency are growing in size and prominence in the Philippines. The segment now represents 16% of the fintech sector with solutions that include Citadax, a licensed cryptocurrency exchange by SCI Ventures, BuyBitcoin.ph, a bitcoin exchange platform, and MergeCommit, a software company providing blockchain-based products for businesses.

The Philippine government is keen to make the country, especially the Northern Philippines, the Silicon Valley of the Asian continent. The aim is to make the Cagayan Economic Zone Authority a center for cryptocurrency and blockchain firms. And the region has a large reserve of required skilled manpower, who can readily engage with the world’s leading cryptocurrency companies and pave the way for the next generation of innovations. 

Many companies in the country are also joining hands with offshore fintechs to provide blockchain technology, cryptocurrency solutions, and ultimately convenient financial technology. Some 21 offshore companies offer blockchain and fintech services and are ready to expand their operations in the Cagayan Economic Zone. In the next 2 years, over $40 million in investments are expected from these companies to create a technological garden in Cagayan Valley.

The Monetary Authority of Singapore (MAS) has supported the efforts in creating Bonds.PH and MAS Chief FinTech Officer Sopnendu Mohanty said the blockchain community in Singapore will work together with the Philippines to share open-source resources and learnings and facilitate connecting corresponding nodes to integrate market infrastructure for interoperability and transparency.

Golden Time for the Startups 

The blockchain can be beneficial for entrepreneurs, and in a country where the majority of licensed businesses tend to be small to medium enterprises (SMEs), that's a huge deal. Competitions for the best startup concepts that make use of the blockchain, as well as hackathons, have been increasing in popularity in recent months.

A study conducted by Cyberius found that Philippine startups are beginning to use blockchain technology at an increasing rate. And with that continuing widespread use, the possibilities of blockchain integrating into standard business practice in the country seems more and more likely as each year passes.

While the Philippines' financial industry is pioneering blockchain use in the country, the business sector isn't too far behind. According to CoinDesk, the blockchain has massive potential for growth in the Philippine market. Startups like Coins.ph and GOW using the technology to make cash transfers in the country more convenient at lower rates than traditional physical banking.

Conclusion

The Southeast Asian country is at the vanguard of rapid economic growth. It would not be an exaggeration to remark that blockchain technology is changing financial operations in the Philippines. The current situation can finally provide a financial, and more importantly, a legitimate platform for people to buy, trade, and sell, minimizing the need to use physical fiat currency.