The Bangko Sentral ng Pilipinas (BSP) Deputy Director Leah Irao advised Filipinos to be cautious with “cryptocurrency based games,” reminding the public not to risk money on things unfamiliar to them.
In a report from Unbox.ph referencing the YouTube video of “Kaasenso with Gerard and Mitch,” the Deputy Director of Payments System Oversight confirmed that the central bank is “monitoring” the highly popular NFT game called Axie Infinity. The report also said the BSP currently has no specific guidance about the game, but it reminded the public to only transact with registered entities. Finally, the latter half of the report proceeded into the topic on Lyka Gems, which recently received a cease and desist order from the central bank.
In the YouTube video (below), when asked how the BSP has become aware of Axie Infinity, Deputy Director Irao answered that it’s because of media inquiries and requests the BSP received asking about the game.
There are 17 of these licensed entities called “virtual assets services providers or VASPs” which are cleared by the BSP to facilitate the trading of crypto into PHP and vice versa.. Among them, BloomX facilitates direct trading of SLP, the crypto earned when playing Axie Infinity, into PHP. Local exchanges like PDAX and Coins.ph (in addition to BloomX) also facilitate trading of Php to ETH, the crypto used to buy Axies. Binance has recently allowed direct trading of SLP to PHP via peer-to-peer (P2P), meaning both parties can use Binance’s escrow system to trade amongst themselves (meaning Binance is not touching the PHP in the transaction.)
The Axie Infinity Phenomenon in the Philippines
Recent report suggests that the majority of Axie Infinity players are in the Philippines. In a newsletter, Luis Buenaventura, co-founder of BloomX estimates that roughly Php 2 billion are remitted to the Philippines via trading of SLP to Php. “To put that into perspective: 2 billion pesos is the average amount of remittances that ALL the OFWs living in Hong Kong send back home to the Philippines each month. But there are 800,000 of them stationed there! And don’t even get me started on how exploitative their living conditions are. Meanwhile, these Axie gamers are playing from their own bedrooms 3-4 hours a day, and making 4x as much. (Not to mention that they’re spending their money here, bolstering the local economy.)”
In an op-ed on Coindesk, Leah Callon-Butler, Director of consulting firm Emfarsis writes, “Let’s be conservative and assume the average Axie player earns about 150 SLP daily. If SLP is trading at $0.20, and there are one million Filipino DAU, that would bring in US$10.8 billion annually. This is totally conceivable when you think of it as less than 1% user adoption in a country with a populace of 111 million, or if you think of it as a slice of the total revenue that could be generated by play-to-earn as a sector.”
Is Axie a Scam? BloomX Co-Founder Doesn’t Think So
In another newsletter, Luis said that while he doesn’t think Axie Infinity is a ponzi scheme, there are valid concerns that the BSP or the Securities and Exchange Commission (SEC) would go after the game. (The SEC recently launched its Philfintech Innovation Office, to become the Commission’s first point of contact with licensed and unlicensed fintech entities so they can understand their business models and formulate recommendations or actions if needed.)
Luis said it’s possible to make some predictions based on how the local regulators has dealth with crypto projects in the past. He mentioned that Axie not being a payments system and Sky Mavis, the developer of the game, not directly soliciting gamers to invest would mean the game would not be asked to stop operations on the same grounds as Lyka, which the BSP thinks is an operator of payments services. “This is a critical distinction that puts it outside of the BSP jurisdiction, because the game platform itself doesn’t engage in the conversion of peso to crypto, and only accepts payments within its own ecosystem,” said Luis. “So if the government does go after Axie, it will [likely be] for different reasons,” he continued, while at the same time inviting the community to start thinking about a situation as the above.
A documentary by Emfarsis, Yield Guild Games, and Delphi Digital highlighted how gamers (and non-gamers) in Cabanatuan City survived the lockdown by earning a living through playing Axie Infinity.
This article is published on BitPinas: BSP Deputy Director: No Specific Guidance on NFT Games