3rd update: August 6, 2019: PHX is now called PHX. An earlier version of the article called it UPHP (which was the original name of UnionBank’s stablecoin).
2nd update on May 28, 2019 to include new information, specifically the blockchain to be used for this initiative.
1st Updated on May 15, 2019.
(Makati, Philippines) May 14, 2019 – The Bangko Sentral ng Pilipinas (BSP) approved UnionBank as the first commercial bank that will issue bank-backed Peso blockchain-based token (PHX).
The commercial bank-backed token called PHX is pegged to the Philippine Peso (meaning 1 PHX = 1 Php), backed by UnionBank. The issuance and testing will first be piloted by UnionBank account holders for transferring funds, sending, and receiving payments.
I had the opportunity to ask UnionBank for more details about their peso token and blockchain in general.
On the benefits of acquiring PHX versus traditional e-Money
I first inquired why there is a need for a bank to issue PHX (Peso Token). Banks, by far, have access to fiat and traditional e-Money.
According to Mr. Arvie de Vera, SVP & Head of Fintech Business Group at UnionBank, PHX, as expected, is built on the blockchain, which by design comes with the following benefits – transparency and immutability. These elements make it efficient in preventing fraud and protecting against identity theft. Mr. de Vera also cited immediate settlement and cost effectivity.
Also, approval by the BSP distinguishes it from other global blockchain-based tokens or stablecoins. (There are other Peso “stablecoins” also approved by the BSP and have been around for a while- but not blockchain based. Meanwhile, the other blockchain-based tokens that exist are not regulator-approved.)
“By it being bank-backed and approved by the Bangko Sentral, the PHX blockchain based token distinguishes itself by it having a stable value backed by trusted institutions.” – Arvie de Vera, UnionBank SVP & Head of Fintech Business Group
Note: It can be remembered that weeks ago, we reported about peg.PHP, a Peso-backed stablecoin by crypto exchange BitSpark. In this article, they explained why they did not need a go-to signal from the Philippine Central Bank to launch a stablecoin. Unless it is not yet obvious, anything a bank does in the Philippines has to be approved by the BSP. It just makes sense to make use of this distinction (the BSP approval) to differentiate it from other stablecoins or tokens, especially blockchain-based.
Also, remember that RCBC is also planning to launch their stablecoin but no word as of yet to when it will be available.
On the blockchain to be used
Update May 28, 2019: UnionBank CEO Edwin Bautista said the Peso Stablecoin will be running through UnionBank’s i2i, the bank’s blockchain platform which is built on Consensys’ Kaleido platform. i2i allows rural banks to be connected with each other and to the main banking network in the country.
On how PHX will work versus e-Peso
Mr. de Vera said PHX is distinct from traditional e-money because it leverages on blockchain technology whose underlying value is “held in an escrow account”, ensuring 1-to-1 parity between pesos vs. tokens at all times. With that, any customer can redeem their PHX tokens for cash in real time.
On how UnionBank will ensure double spending will not happen
“As a bank, our services and technologies are structured to avoid double spending under any circumstance. Blockchain by design prevents double spending by having multiple nodes validate the transaction on the receiving and sending side before completing the transfer of value.”
On how customers will not be confused between PHX and e-Peso
“It will be interoperable and may be used by various apps to transact and store value. Just like other currencies and accounts with UnionBank, customers will know how much PHX they hold at a given time.”
Will UnionBank launch a crypto wallet? Or integrate PHX in the existing UnionBank app?
Mr. de Vera said PHX is designed to be interoperable and can be used by any BSP compliant platform intended to transfer value between blockchain-enabled wallets and also other fiat wallets. This interoperability will also allow PHX to be available for cross-border transactions across various regulatory approved exchanges globally.
He cited platforms like UnionBank’s i2i Rural Bank, blockchain-based remittance “bank-in-a-box” platform, BSP-approved virtual currency exchanges, or BSP-approved token-enabled mobile apps, to name a few locally. However, this PHX is also going to be available on global platforms in the future.
“Ultimately, this aims to offer interoperability with other token-enabled projects in order to bring the maximum benefits of distributed ledger technology to its users and customers.”
This article originally appeared on BitPinas: [Exclusive Interview] UnionBank to Launch Peso Stablecoin Called PHX
We appreciate and thank UnionBank for the interview and the quotes.
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