The Central Bank of the Philippines, known as Bangko Sentral ng Pilipinas (BSP), has granted approval for controlled trials of a national stablecoin that will be tied to the local peso on a 1:1 basis. This decision was made in collaboration with Coins.ph, a popular crypto wallet provider in the Philippines, with the aim of exploring the potential of a digital currency linked to the country’s fiat currency. The pilot project for the stablecoin, named PHPC, has been approved under the BSP’s Regulatory Sandbox Framework. Coins.ph will be responsible for maintaining cash reserves in pesos equivalent to the circulating supply of PHPC within the sandbox environment.
The main goal 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 of PHPC and its impact 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 broader adoption. However, it should be noted that the formal public deployment of PHPC will be subject to final evaluations and approvals by the central bank.
The duration of the testing phase will depend on the complexity of the project and can range from three to 12 months, according to local regulations. The BSP is committed to ensuring a thorough evaluation process and has not disclosed an official deadline for the stablecoin experiment. It is worth mentioning that this initiative is not the first of its kind in the Philippines. In July 2019, UnionBank, a local commercial bank, introduced a payments-focused stablecoin called PHX as part of its efforts to promote financial inclusion and support the BSP’s digital financial inclusion agenda. PHX, like PHPC, offers seamless redemption for 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 expected to unveil a regulatory framework for crypto assets and trading in the latter half of 2024. The upcoming guidelines aim to regulate trading within the country and prioritize investor protection. The Securities and Exchange Commission (SEC) recently took action to remove Binance-linked applications from Apple and Google app stores in the Philippines, citing concerns over the security of investors’ funds.