The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), has taken a significant step towards exploring the potential of digital currencies by approving a pilot program for a national stablecoin tied to the local peso.
This initiative, undertaken in collaboration with the crypto wallet provider Coins.ph, aims to assess the real-world applications and impact of a digital currency backed by the Philippine fiat currency.
TLDR
- The Philippine central bank (Bangko Sentral ng Pilipinas, BSP) has approved Coins.ph to pilot a Philippine Peso-backed stablecoin called PHPC under its Regulatory Sandbox Framework.
- The PHPC stablecoin will be backed by Coins.ph’s cash and cash equivalents held in Philippine bank accounts, and the pilot aims to assess the benefits of the stablecoin in real-world applications.
- Coins.ph plans to integrate the stablecoin into remittance platforms in countries with significant remittance flows to the Philippines, which has one of the world’s largest remittance markets.
- The BSP is exploring the potential of a digital currency tied to the local fiat currency, with the aim of facilitating a seamless transition between the stablecoin and physical fiat currencies.
- The results of the trials will play a crucial role in determining the stablecoin’s readiness for broader adoption, and a formal public deployment will be subject to final evaluations and approvals by the central bank.
Under the BSP’s Regulatory Sandbox Framework, Coins.ph has been given the green light to pilot the Philippine Peso-backed stablecoin, known as PHPC.
The stablecoin will be backed by Coins.ph‘s cash and cash equivalents held in Philippine bank accounts, ensuring that the digital currency is fully collateralized by physical fiat reserves.
The pilot program will serve as a crucial testing ground for evaluating the benefits and challenges of integrating a stablecoin into the existing financial ecosystem.
Coins.ph CEO Wei Zhou, who previously served as the Chief Financial Officer at Binance, expressed optimism about the project, stating that the company expects to obtain full approval for the stablecoin if certain metrics are met during the sandbox testing phase.
One of the key objectives of the PHPC stablecoin is to facilitate a seamless transition between the digital currency and physical fiat currencies.
By pegging the stablecoin to the local peso, the BSP aims to explore the potential for a digital currency that can be used for various purposes, such as domestic and cross-border payments, trading with other virtual assets, hedging against market volatility, and providing collateral and liquidity in decentralized finance (DeFi) applications.
#ICYMI: #CoinsPH has been granted @bangkosentral (BSP) approval to pilot PHPC, a Philippine Peso stablecoin 🇵🇭
Learn more about this milestone and the pilot here: https://t.co/zpQQvr7Pv9 pic.twitter.com/a2jWB8mSeJ
— Coins.ph (@coinsph) May 9, 2024
The Philippines has a significant remittance market, with inflows reaching $12 billion annually, making it one of the world’s largest remittance destinations.
Recognizing this, Coins.ph has expressed plans to integrate the PHPC stablecoin into remittance platforms in countries with substantial remittance flows to the Philippines.
This move could potentially streamline and enhance the efficiency of cross-border remittances, a crucial aspect of the Philippine economy.
The upcoming sandbox testing phase will serve as a real-world trial for the PHPC stablecoin, allowing the BSP and Coins.ph to evaluate its impact on the local fiat ecosystem.
The results of these trials will play a pivotal role in determining the stablecoin’s readiness for broader adoption and potential public deployment.
It is important to note that a formal public launch of the PHPC stablecoin will be subject to final evaluations and approvals by the central bank.
The BSP has not disclosed an official deadline for the testing phase, but local regulations stipulate that the duration can range from three to 12 months, depending on the complexity of the project.
The Philippines is not entirely new to the concept of stablecoins. UnionBank, a local commercial bank, introduced a payments-focused stablecoin called PHX in 2019 as part of its efforts to promote financial inclusion and support the BSP’s digital financial inclusion agenda.
The PHX stablecoin offers seamless redemption for pesos, which are then credited back to users’ UnionBank accounts.
As the Philippine government gears up to unveil a regulatory framework for crypto assets and trading by the latter half of 2024, with a focus on investor protection, the PHPC stablecoin pilot represents a significant step towards exploring the potential of digital currencies within the country’s financial landscape.
