A recent posting at Cointelegraph discusses the Bangko Sentral ng Pilipinas (Philippines Central Bank) opinion around cryptocurrencies’ current status. It seems that retail crypto adoption has grown substantially in the past couple of years and the BSP wants to make sure that Philippines citizens are properly educated around the risks associated with blockchain and the decentralized versions of crypto assets. It does not seem that payment use cases are paramount, rather trading and holding the assets, as is the case in most of the world. Nonetheless there are potential beneficial uses for cryptos, according to the BSP.
“The BSP’s focus is on virtual assets’ capacity to improve the delivery of financial services, particularly payments and remittances services, as it has potential to provide faster and economical transfer of funds, both for domestic and international setting,” the BSP stated….According to the BSP, crypto adoption in the Philippines has increased over the past few years due to the COVID-19 pandemic. As such, Bitcoin (BTC) trading volumes in the Philippines were hitting new highs on some peer-to-peer crypto exchanges in July 2021.’
Can Blockchain Improve Financial Services?
The BSP is not planning any limitations on the investment levels and trading of cryptos, but does expect to offer regulations that enable relatively safe usage. The BSP does not see decentralized cryptos as a viable payment method given the high level of volatility, continued potential for unlawful activity and general lack of security protocols. The BSP considers cryptos as virtual assets rather than a currency. There is an expectation that blockchain can improve financial services in the Philippines and therefore a CBDC project is getting underway. The interesting thing about this CBDC project is that the BSP will concentrate on wholesale rather than retail, which is different from most other CBDC projects that we know of.
‘The BSP still sees great opportunities in utilizing blockchain technology to enhance the security and efficiency of financial services in the Philippines. The central bank is currently exploring the issuance of a central bank digital currency (CBDC)….The BSP is planning to undertake Project CBDCPh, a pilot project that will enable inter-institutional fund transfers utilizing a wholesale CBDC platform. According to the bank, a retail CBDC is not highly relevant for the country in the near term.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.