The central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP), has given the green light for controlled testing of a national stablecoin coin that will be pegged at a 1:1 ratio to the local peso.
According to a recent announcement, the move comes as the BSP, in partnership with cryptocurrency wallet provider Coins.ph , aims to explore the potential of a digital currency pegged to the country’s fiat currency.
A pilot project for a stable coin based on the Philippine peso, known as PHPC, has been approved under the BSP’s regulatory framework.
Coins.ph, a well-known player in the local crypto space, will be responsible for maintaining cash reserves in pesos equivalent to PHPC’s stablecoin supply. The main purpose of linking the stablecoin coin to the local currency is to facilitate a smooth transition between PHPC and physical fiat currencies.
Upcoming tests to serve as real-world trial version
The upcoming testing phase will serve as a real-world trial of the PHPC stablecoin and its impact on the local fiat ecosystem.
PHPC is expected to have a variety of potential applications, including domestic and cross-border payments, trading with other virtual assets, hedging against market volatility, and providing collateral and liquidity for decentralized finance (DeFi) applications.
The results of the trials will play a key role in determining the readiness of the stablecoin coin for wider adoption. However, it is important to note that the formal public deployment of PHPC will be subject to final evaluation and approval by the central bank.
According to local regulations, the duration of the testing phase could range from three to 12 months, depending on the complexity of the project. Although an official date for the stablecoin experiment has not been disclosed, the BSP is making every effort to ensure a thorough evaluation process.
The initiative is not the first of its kind in the Philippines.
UnionBank, a local commercial bank, launched a stablecoin called PHX for payments in July 2019. The launch of PHX was part of UnionBank’s efforts to support the BSP’s digital financial inclusion program.
PHX, like PHPC, offers a seamless exchange of pesos, which are then transferred back to users’ accounts at UnionBank.
Stablecoin has been integrated with UnionBank’s i2i platform, which enables secure transactions between individuals and institutions.
Philippines to announce cryptocurrency guidelines
The Philippine securities regulator is expected to unveil a regulatory framework for crypto assets and trading by the second half of 2024. The upcoming cryptocurrency guidelines aim to regulate trading in the Philippines, prioritizing investor protection.
Last month, the SEC took action to remove Binance-related apps from Apple and Google app stores in the Philippines.
“The SEC has identified [Binance] and determined that the public’s continued access to these websites/apps poses a threat to the security of funds of investing Filipinos,” SEC Chairman Emilio Aquino said in letters to the companies.
