The Central Bank of the Philippines, known as Bangko Sentral ng Pilipinas (BSP), has approved trials for a national stablecoin that will be tied to the local peso at a 1:1 ratio. This decision was made in partnership with crypto wallet provider Coins.ph, with the aim of exploring the potential benefits of a digital currency linked to the country’s fiat currency. The pilot project, called PHPC, has been given the green light under the BSP’s Regulatory Sandbox Framework. Coins.ph, a prominent player in the Philippines’ crypto industry, will be responsible for holding cash reserves in pesos equivalent to the circulating supply of the PHPC stablecoin within the sandbox environment. The main objective of pegging the stablecoin to the local currency is to facilitate a smooth transition between PHPC and physical fiat currencies. The upcoming sandbox testing phase will serve as a real-world trial, evaluating the impact of the PHPC stablecoin on the local fiat ecosystem. PHPC is expected to have various applications, including domestic and cross-border payments, trading with other virtual assets, hedging against market volatility, and providing collateral and liquidity in decentralized finance (DeFi) applications. The results of the trials will play a crucial role in determining the stablecoin’s readiness for wider adoption. However, it’s important to note that the official deployment of PHPC will be subject to final evaluations and approvals by the central bank. The testing phase can last between three to twelve months, depending on the complexity of the project, as per local regulations. While an official deadline for the stablecoin experiment has not been disclosed, the BSP is committed to conducting a thorough evaluation process. This initiative is not the first of its kind in the Philippines, as a local commercial bank called UnionBank introduced a payments-focused stablecoin called PHX in July 2019. The launch of PHX was part of UnionBank’s efforts to promote financial inclusion and support the BSP’s digital financial inclusion agenda. Similar to PHPC, PHX allows for seamless redemption of pesos, which are then credited back to users’ UnionBank accounts. The stablecoin has been integrated into UnionBank’s i2i platform, enabling secure transactions between individuals, institutions, and across different islands. In addition to the stablecoin trials, the Philippines’ securities regulator is also working on unveiling a regulatory framework for crypto assets and trading by the second half of 2024. These guidelines aim to regulate trading activities within the country and prioritize investor protection. Recently, the SEC took steps to remove Binance-linked applications from Apple and Google app stores in the Philippines, citing concerns about the security of Filipino investors’ funds.
