The Philippines and its central bank legalized cryptocurrencies such as bitcoin and Ethereum in 2017 as a remittance method, effectively allowing local businesses to deal with digital currencies in sending domestic and international payments.
In February 2017, the Philippine government classified cryptocurrencies as a remittance method and an alternative transaction settlement layer. The official circular released by Bangko Sentral ng Pilipinas, the country’s central bank, read:
“The Bangko Sentral does not intend to endorse any VC, such as Bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate VCs when used for delivery of financial services, particularly, for payments and remittances, which have a material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.”
The legalization of cryptocurrencies as an alternative payment method has allowed businesses like Coins, a cryptocurrency wallet and brokerage that raised more than $10 million from Naspers Ventures and the venture capital firm of former Google’s parent company Alphabet executive chairman Eric Schmidt to become one of the most popular mobile applications in the Philippines.
Coins, which operates in the Philippines as Coins.ph, has become one of the top 10 most widely utilized apps in the country across all categories, and has expanded to Malaysia and Thailand as Coins.my and Coins.th.
In acknowledgement of the exponential growth rate of local cryptocurrency startups and businesses, the Philippines recently announced its plan to create a special economic zone that would allow cryptocurrency and blockchain-related businesses to operate freely with less regulations and policies.
Economic Zone
This year, Malta has become a major hub for cryptocurrency and blockchain projects, with the permanent relocation of multi-billion dollar cryptocurrency companies like Binance. According to several sources, the presence of Binance in Malta is expected to increase the country’s GDP by large margins.
The Philippines is attempting to recreate the success of Malta and other countries like Switzerland that have evolved into a safe haven for cryptocurrency businesses. Previously, it was difficult for governments to commit to the cryptocurrency industry due to the uncertainty of regulations in the global market. With the US, South Korea, and Japan committed in embracing and properly regulating the cryptocurrency sector, countries have become more comfortable in accepting cryptocurrency businesses as legitimate financial service providers.
This week, the Philippine government has approved 10 cryptocurrency and blockchain companies to operate in the Cagayan Economic Zone Authority (CEZA). Raul Lambino, the chief at CEZA, stated:
“We are about to licence 10 platforms for cryptocurrency exchange. They are Japanese, Hong Kong, Malaysians, Koreans. They can go into cryptocurrency mining, Initial Coin Offerings, or they can go into exchange.”
Within the CEZA, these companies can freely pursue any operation such as ICO, trading, mining, and development without the restrictions of the central bank or local financial authorities. Lambino and the Philippine government stated that they believe the removal of strict policies would allow companies in the blockchain sector to serve both domestic and international users efficiently.
