A central bank official has said that digital currency conversions in the Philippines — a country where the coins are considered legal tender — hit nearly $40 million in recent months.
Central Bank’s Crypto-Friendly Policy
Conversions from pesos to digital coins averaged $36.74 million per month in the first quarter, according to Deputy Governor Chuchi G. Fonacier from the Bangko Sentral ng Pilipinas (BSP), as reported by Business World. By comparison, the fourth quarter of 2017 saw exchanges totaling $38.27 million. The real number is likely much higher, as the amount covers only transactions reported by two digital currency exchanges registered with the central bank.
In February of last year, the BSP moved to effectively legalize cryptocurrencies in the Philippines by regulating businesses that convert fiat currencies to digital ones. As part of the arrangement, these fiat to digital conversions require the release of information to consumers regarding risk management in attempts to guard against money laundering.
In relation, the Philippine’s Anti-Money Laundering Council has said it will start looking at digital currency transactions as part of its crackdown on ‘dirty’ money. Exchanges themselves are also required to report suspicious transactions.
The $36.74 million monthly figure comes from the digital currency exchanges Rebittance, Inc. and Betur, Inc., which have been officially recognized by the BSP. The central banking authority recognizes the benefits of using digital currencies to initiate faster and cheaper remittance transactions. At the same time, it has warned about rapidly fluctuating values and the potential use for crime and other cybersecurity risks.
Moving forward, the BSP is also looking at whether exchanges will need to acquire licenses as electronic money issuers, on top of the digital currency licenses. This will likely be the case if clients are able to store their digital coins with the institutions.
Previously, the BSP Deputy Director, Melchor Plabasa, talked positively about digital currencies, expressing confidence that the country’s market regulators will be able to manage the risks presented by the coins. He stated:
“[Bitcoin is] like any other monetized instrument [and even] an investment instrument. There are risks, but essentially it can be managed. If you want something that is fast, near real-time and convenient, then there’s the benefit of using virtual currencies like Bitcoin.”
UnionBank Implementing Blockchain
As NewsBTC reported last month, UnionBank, one of the biggest banks in the Philippines, is working with U.S.-based fintech company ConsenSys, founded by Ethereum co-founder Joseph Lubin, to assist local financial institutions in integrating blockchain-based financial solutions.
The Philippines have a unique financial infrastructure, and only upper class and high net-worth individuals can afford traditional banking services. Because of this, the vast majority of individuals and businesses rely on local remittance providers like M Lhuillier, Cebuana Lhuillier, Palawan, and LBO to send and receive payments both domestically and internationally.
Both ConsenSys and UnionBankbelieve that blockchain will help drastically improve the current financial infrastructure and ecosystem. In a heavily remittance-focused country like the Philippines, implementing technologies that can provide transparency, security, and efficiency in processing transactions is a massive step in the right direction.