BSP: Cryptocurrency Role Seen Growing in Remittances, Gaming

“We have also seen a number of remittance companies now using crypto to remit money instead of using the traditional clearing and settlement models.”

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By Shiela Bertillo

Melchor Plabasan, Bangko Sentral ng Pilipinas (BSP) Technology Risk and Innovation supervision director, stated that the main applications he is seeing for cryptocurrency as a regulator are in investment, remittances and payment. He mentioned this during the BusinessWorld Fintech’s Place in the Growth of Cryptocurrencies forum.

The speakers presented both opportunities and risks; noting that as cryptocurrency continues gaining popularity and utility in the Philippines particularly in remittances, payments, and online games. They expect more people to enter the cryptocurrency industry.

“I think the increasing adoption of virtual assets pushes us to continuously enhance our regulatory and supervisory authority abilities to appropriately oversee these activities because they may have an impact on the stability and integrity of our financial system,” Plabasan said.

According to BSP Governor Benjamin E. Diokno, the transactions in virtual currency in the Philippines jumped by 71 percent to P105.93 billion in the first half from P62.12 billion in the same period last year. As per BusinessWorld, cryptocurrency transactions alone went up to 362% year on year while e-money transactions rose by 62% year on year. (Read more:  BSP: Virtual Currency Transactions Reach Php 106 Billion in First Half of 2021)

“We have also seen a number of remittance companies now using crypto to remit money instead of using the traditional clearing and settlement models. We have also seen institutional investors as well joining the crypto world, which of course, we can somehow attribute to regulatory certainty,” Plabasan stated.

Nichel O. Gaba, Founder and CEO of Philippine Digital Asset Exchange (PDAX)  noted the growing adoption by financial institutions and supportive regulations are expanding its use.

“We’re now using virtual assets or blockchain technology to power cheaper remittances, provide more people the opportunity to earn, whether it’s through playing a game or trading and investing. But there’s a lot more to come,” he said.

Swarup Gupta, an industry manager at The Economist Intelligence Unit, mentioned that cryptocurrencies hold the potential to generate alternative income via play-to-earn games.

“Several Filipinos have found it to be an avenue for earning money. The reason is that you can actually convert these tokens into real world, fiat currency,” Gupta said.

He stressed that virtual assets will be here to stay in many forms.

“It’s a good hedge against inflation and there is a negative reaction to any stringent regulatory action,” he added.

Consequently, during the BSP learning session, Cryptocurrency 101, last month Plabasan stated that the central bank has cryptocurrency specialists in their team. He assured the public that they have ethical hackers, data scientists and trained specialists. 

While the Securities and Exchange Commission (SEC) Commission Kelvin Lee also confirmed, although not as well-staffed as the BSP, the SEC also has cryptocurrency specialists with them. Lee also mentioned SEC’s newly established  PhiliFintech Innovation Office (PIO) which aims to focus on the regulation of the use of fintech in the Philippines. (Read more: BSP Says They Have Crypto Specialists)

Regarding the play-to-earn market, last August, the BSP clarified that the play-to-earn non fungible token (NFT) game Axie Infinity is not a  virtual asset service provider (VASP). However, the central bank is still considering its possibility to be an operator of payment system (OPS) due to the increase of businesses accepting smooth love potion (SLP), one of the game’s token with real money value, as a form of payment. (Read more: BSP Closely Monitors Local Axie Infinity SLP Merchants System)

Axie Infinity increased its popularity in the Philippines for providing a chance to earn for the pandemic-stricken Filipinos. Last month, the BSP stated that the review for Axie Infinity’s possible status as on OPS is still ongoing as well as the terms for the use of NFTs and the monitoring of the other online gaming platforms. (Read more: BSP: Axie Infinity’s OPS Status Still Under Review)

While another OPS candidate, LYKA,  a social media platform that allows its users utilize its Gift cards in Electronic Mode or GEMs as payment for goods and services, to suspend operations and was invited to register with the BSP ast July. (Read more: BSP Orders Lyka to Stop Operating, Invites Registration)

In October, LYKA announced that it will apply for an OPS license but, as of writing, the BSP still hasn’t received the necessary documents from them.. (Read more: BSP Welcomes LYKA’s Plan to Register as OPS)

Last month, both the BSP and the SEC clarified that they do not encourage people to invest in cryptocurrency. SEC Commissioner Lester Lee stressed that the public must do their own due diligence before dealing with any entity. (Read more: BSP, SEC Do Not Encourage the Public to Invest in Crypto)

This article is published on BitPinas: BSP: Cryptocurrency Role Seen Growing in Remittances, Gaming

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