Philippines

Philippines SEC begins Binance ban countdown

The head of the Philippines SEC clarified that Binance and any other unregistered exchange issued with an advisory has three months before they are banned from the country.

The Philippines Securities and Exchange Commission head Kelvin Lee clarified in a panel on Dec. 13 that a ban on Binance would come into effect three months after its advisory was issued.

According to a report from local news BitPinas, Lee said there has been a lot of confusion on the internet about the ban after regulators issued an advisory to the cryptocurrency exchange for operating without a license on Nov. 28.

He was asked to clarify the matter and that the ban was “supposed to be three months from the issuance date,” which he said was given on Nov. 29.

Philippines securities regulator seeks more authority to police the crypto industry

The Filipino securities regulator is moving to enact tighter rules on crypto, crypto companies and other financial products using blockchain technology.

The Philippines Securities and Exchange Commission (SEC) seeks to bring cryptocurrencies under its scope and beef up its authority over the local cryptocurrency industry under new draft rules.

According to a Jan. 25 report in a local media outlet, the securities regulator put forward for public comment draft rules relating to financial products and services, which also cover cryptocurrencies and digital financial products.

The SEC said in a statement the draft rules will operationalize a newly signed law and give it “rule-making, surveillance, inspection, market monitoring, and more enforcement powers.”

The guidelines expand the definition of a security to include “tokenized securities products” or other financial products using blockchain or distributed ledger technology (DLT).

Other financial products, including digital financial products and services relating to those accessed and delivered through digital channels along with their providers, will also come under the SEC’s remit.

*The SEC Philippines headquarters building in Makati, inside the Metro Manila region. Source: The* *SEC*

The ability to enforce securities regulations is similarly expanded. The SEC could restrict service providers from collecting excessive interest, fees, or charges.

The regulator would also have the power to disqualify or suspend directors, executives, or any other employee found to violate the laws. It could also suspend a firm’s entire operation.

Local laws allow the SEC to create its own rules for applying legislation in its jurisdiction, with the central bank of the Philippines and the country’s insurance regulator also allowed to create rules to supplement related laws.

The latest development marks a continuation of the regulator’s heavy crackdown on cryptocurrencies.

In late December 2022, the SEC warned the public against using unregistered exchanges operating within the country, claiming a number of exchanges were “unlawfully allowing” Filipinos to access their platforms.

In August 2022, the Philippine central bank said it was taking a three-year break from accepting new virtual asset service provider applications, with the process expected to reopen on Sept. 1, 2025.

Union Bank of the Philippines launches Bitcoin and Ethereum trading

UnionBank, one of the largest universal banks in the Philippines, debuts cryptocurrency trading via a partnership with a Swiss crypto firm.

The Union Bank of the Philippines, or simply UnionBank — one of the largest universal banks in the Philippines — has launched a pilot program for Bitcoin (BTC) and Ether (ETH) custody and trading services for select retail customers, the firm said in a joint announcement on Nov. 2.

The new investment and trading feature launched in collaboration with Swiss crypto technology firm Metaco, with UnionBank going live on Metaco’s digital asset platform Harmonize. UnionBank initially partnered with Metaco for the development of crypto trading services in January 2022.

Licensed and supervised by the Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), UnionBank has been actively exploring the crypto industry in recent years. In 2019, UnionBank launched a payments-focused stablecoin pegged to the Philippine peso.

Henry Aguda, chief technology officer and chief transformation officer at UnionBank, said that Metaco has been critical in the bank’s goal to provide “customer-centric” services in the Philippines. He also noted that UnionBank is among the early regulated adopters of crypto in the country, stating:

“We are proud to continue UnionBank’s series of industry firsts, this time being the first regulated bank in the country allowing digital currency exchange features for clients.”

The news comes shortly after Philippine President Ferdinand Marcos highlighted the importance of adopting blockchain technology to master digital banking and digital transactions.

In an official presidential speech published in September 2022, Marcos referred to several related milestones by UnionBank, stating:

“The track record of UnionBank in creating opportunities through innovation and digital solutions in the banking sector is uncontested.”

Previously, BSP also warned the public against using non-local crypto trading platforms, stressing that dealing with foreign virtual asset service providers poses challenges in enforcing consumer protection. As of August, there were 19 registered VASPs in the Philippines.

The Philippines pushes back against foreign exchanges, continuing a protectionist streak

The Central Bank of the Philippines warns the public against using non-local crypto trading platforms.

The pressure on crypto is growing swiftly in the Philippines. After a recent series of controversial moves from the state regulators and local think tanks, the country’s central bank published a warning to the citizens, discouraging them from engaging in any operations with unregistered or foreign crypto exchanges. The announcement itself doesn’t sound menacing but taken in the context of accompanying developments, it makes a 112-million nation a restive region for crypto.

On Thursday, the Bangko Sentral ng Pilipinas (BSP) published a warning note to the country’s citizens, “strongly urging” them not to deal with virtual asset service providers (VASPs) that are either unregistered or domiciled abroad.

The Bank emphasized that any deals with virtual assets are high-risk activities by themselves, and with foreign platforms, there occurs an additional challenge in enforcing legal recourse and consumer protection. That leaves the public with 19 registered VASPs on which to conduct their operations.

The list will hardly broaden, at least in the next three years, because a BSP memorandum halted the issue of new VASP licenses as of Sept.1. This is how the BSP understands the delicate balance of promoting innovation in finance and managing risks.

Perhaps the most intriguing part of the subject concerns one of the world’s largest crypto exchanges, Binance, which is trying to obtain the national license and, should the BSP memorandum be taken seriously, has less than two weeks to do it.

In a recent interview with Cointelegraph, Binance’s head of Asia-Pacific, Leon Foong, said that they have already submitted the relevant paperwork to acquire the licenses but cannot provide any other details as they may be confidential. The problem is that the Philippine Securities and Exchanges Commission (SEC) has already cautioned the public not to invest in Binance, repeating the sentiments of an Infrawatch PH think tank, which had previously lobbied for banning the exchange over alleged illegal promotions.

At the same time, the Philippines doesn’t consider itself particularly strict or protectionist in its relationship with the crypto industry. As the BSP claimed in its written statement to Cointelegraph on Monday, it sees “a lot of benefits associated with crypto and blockchain.” It is eager to promote a crypto education. In particular, the BSP revealed its intention to avoid “any significant limits on crypto investments or trading at this point.” The regulator aims at “risk-based and proportionate regulations.”

Still, the country remains a hypothetically attractive destination for crypto. It is considered one of the fastest-growing economies in the world, and over 11.6 million Filipinos own digital assets, putting it 10th worldwide in terms of adoption.

Law Decoded, Aug. 8-15: In the eye of Tornado Cash

U.S. Treasury links the crypto mixer with $7 billion worth of laundered money.

Summer is still on, harvesting the fresh names for its list of the crypto companies in deep trouble. This time, the trouble came not from the market or management but from the United States Treasury Department. The regulator has added more than 40 cryptocurrency addresses allegedly connected to crypto mixer Tornado Cash to the Specially Designated Nationals list. These individuals and groups allegedly laundered more than $7 billion worth of cryptocurrency.

Accusations like this don’t come easy — one of the co-founders of Tornado Cash has reported his account suspended at GitHub, while the issuer of the USD Coin (USDC) stablecoin, Circle, froze over 75,000 USDC worth of funds linked to the problematic addresses. By the end of last week, Dutch Fiscal Information and Investigation Service arrested a 29-year-old developer suspected of being involved in money laundering.

The enforcers’ activity has not been taken with a light heart by the industry. Figures like Jake Chervinsky and Jerry Brito criticized the Treasury Department for acting against the tool instead of punishing the concrete individuals. Someone even started a prank campaign, making transactions from Tornado Cash’s smart contract addresses to celebrities such as Coinbase CEO Brian Armstrong and American television host Jimmy Fallon.

Digital ruble might be rolled out by 2024

The Bank of Russia continues working toward the upcoming adoption of the central bank digital currency (CBDC), planning an official digital ruble rollout in a few years. The authority will begin to connect all banks and credit institutions to the digital ruble platform in 2024, a year when the country is expected to hold presidential elections. The central bank also expects to introduce the offline mode for the digital ruble by 2025 alongside the integration of non-bank financial intermediaries, financial platforms and exchange infrastructure.

Uzbekistan blocks access to foreign crypto exchanges

In Uzbekistan, the recently formed crypto regulator, the National Agency of Perspective Projects, is compelling big international players to comply with the local legislation. Some crypto exchanges have found themselves blocked for Uzbeki users due to accusations of unlicensed activity. Apart from obtaining a license, they might have to deploy the servers on the territory of Uzbekistan, as the regulator hints.

No new crypto licenses for three years in the Philippines

While many believe that the Philippines can become a new crypto hub, that dream may be shattered in the meantime as the country’s central bank announced a three-year hiatus from accepting new virtual asset service provider (VASP) applications. The normal application window for new VASP licenses will be closed for three years, beginning on Sept. 1, 2022. However, applications that have already passed the second stage of the process before Aug. 31, 2022, will continue to the next assessment steps.

Crypto needs ‘enabling environment,’ Philippines central bank says

The Philippine central bank sees crypto’s potential for improving domestic and cross-border payments, but the authority is still negative about crypto as a legal tender.

Amid the rising cryptocurrency adoption in the Philippines, the country’s central bank is seeking measures to better protect investors through elevating local crypto awareness.

The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), wants to promote crypto education as the authority sees a lot of benefits associated with crypto and blockchain, a BSP representative said in an interview with Cointelegraph.

“The BSP’s focus is on virtual assets’ capacity to improve the delivery of financial services, particularly payments and remittances services, as it has potential to provide faster and economical transfer of funds, both for domestic and international setting,” the BSP stated.

According to the BSP, crypto adoption in the Philippines has increased over the past few years due to the COVID-19 pandemic. As such, Bitcoin (BTC) trading volumes in the Philippines were hitting new highs on some peer-to-peer crypto exchanges in July 2021.

“During the pandemic, we have seen the willingness of consumers to explore the virtual realm, particularly online platforms that promise to offer income-generating opportunities or play-to-earn applications,” the BSP spokesperson said.

In response to the growing adoption, the Philippine central bank does not plan to adopt any significant limits on crypto investments or trading at this point. Instead, the BSP is looking to implement a regulatory approach aimed at providing an “enabling environment” through “risk-based and proportionate regulations,” the central bank’s representative said, adding:

“The BSP will continue to enhance and expand our financial consumer awareness campaigns specifically designed to educate relevant stakeholders on virtual assets, both as to advantages and the risks involved.”

Despite targeting an “enabling environment” for crypto, the BSP holds a highly negative stance on using crypto as a payment method. “Virtual assets, particularly cryptocurrencies, whose values are derived based on the agreement of the community of users, are not intrinsically designed to serve as legal tender,” the bank noted.

According to the BSP, cryptocurrencies cannot serve as a means of payment due to risks like high volatility and a high potential for unlawful use or theft due to increased anonymity and “weak cyber and digital identity security protocols.” Among other risks, the bank mentioned crypto transaction irreversibility, which means that no central authority would ever be able to cancel a Bitcoin transaction or restore such funds.

The BSP also pointed out that the regulator considers cryptocurrencies virtual assets rather than a currency. “Since the price of most virtual assets is driven by speculation, virtual assets expose users to price volatility and risk of losses,” the BSP noted. To address this, the central bank issued guidelines for virtual asset service providers as part of Circular No. 1108 in January 2021.

The BSP still sees great opportunities in utilizing blockchain technology to enhance the security and efficiency of financial services in the Philippines. The central bank is currently exploring the issuance of a central bank digital currency (CBDC).

The BSP is planning to undertake Project CBDCPh, a pilot project that will enable inter-institutional fund transfers utilizing a wholesale CBDC platform. According to the bank, a retail CBDC is not highly relevant for the country in the near term.

SEC Philippines to investigate Binance over alleged illegal operations

A think tank in the Philippines doesn’t give up on efforts to ban Binance, now claiming that the crypto exchange has been operating illegally in the country.

Philippines’ think tank Infrawatch PH continues efforts to ban Binance in the country by asking more regulators to investigate the cryptocurrency exchange over alleged illegal operations.

Infrawatch PH on Monday filed a twelve-page complaint calling on the Philippines’ Securities and Exchange Commission (SEC) to crack down on Binance’s activities in the Philippines.

According to the think tank, Binance has been operating in the Philippines for several years without approval by appropriate authorities.

Terry Ridon, the convenor for Infrawatch PH, claimed that Binance has no office in Manila and only uses “third-party companies that employ Filipinos for its technical and customer support services.” He also referred to former finance secretary Carlos Dominguez who publicly declared last month that Binance had no records with either the SEC or the Bangko Sentral ng Pilipinas (BSP).

“The SEC has served the public well by banning unscrupulous online lending services. It should similarly do the same for unregistered and unregulated cryptocurrency exchanges in the country,” Ridon said. He added that Binance has been offering many types of crypto products, including spot trading, margin trading, futures contracts, options, crypto loans and peer-to-peer (P2P) trading, despite being unregistered with the SEC, adding:

“We believe these products are in the nature of securities, which under SEC rules, may not be sold or offered for or distribution within the Philippines without a registration statement duly filed with and approved by the SEC.”

A spokesperson for Binance told Cointelegraph that the firm is closely working with local regulators and is looking to secure virtual asset service provider and electronic money issuer licenses in the Philippines.

“We are continuously engaging in discussions with regulators and stakeholders within the country. Our goal is to contribute to the Philippines’ increasingly vibrant Web3 and blockchain ecosystem,” the representative said. The spokesperson also mentioned that Binance introduced mandatory Know Your Customer procedures for all users on the platform last year.

The news comes shortly after the Philippines’ Department of Trade and Industry (DTI) waved off a Binance ban proposal in early July, citing a lack of regulatory clarity from the BSP. The DTI was the first destination for Binance complaints by Infrawatch PH, with the think tank asking the authority to probe the exchange over illegal promotions.

The news comes amid a major spike in crypto trading activity in the Philippines. In July, weekly Bitcoin (BTC) trading volumes in the Philippines peso hit a historic high on the major P2P crypto exchange Paxful. The overall crypto adoption has also been rising in the country in recent years, with companies like PayMaya launching crypto trading features.

BSP did not return Cointelegraph’s request to comment on the status of crypto regulation in the country. Binance did not immediately respond to Cointelegraph’s request for comment.

Philippines’ digital transformation could make it a new crypto hub

The archipelagic country of the the Philippines is exploring blockchain use cases across different industry verticals.

Binance, the cryptocurrency exchange, has recently acquired a virtual asset service provider (VASP) license from the Bank of Spain in order to operate in the country. In its ambitious expansion plans that the cryptocurrency exchange is persisting despite the global jump and market slump in the cryptoverse, there is another country that Binance is looking toward — the Philippines.

In June, the CEO of Binance, Changpeng Zhao, stated in a press briefing in Manila that the exchange is looking to obtain a VASP license in the Philippines. In addition to the VASP, Binance wants to get an e-money issuer license from the central bank of the country, Bangko Sentral ng Pilipinas (BSP). While the former license would allow the platform to offer trading services for crypto assets and the conversion of these assets to the Philippines, the latter will allow it to issue electronic money.

The Philippines is the world’s 36th largest economy in the world by nominal GDP and the third-largest in Asia, according to data from the World Bank. Despite its small size, the country is considered to be one of the fastest-growing economies in the world due to it being newly industrialized, thus marking a distinctive shift from agriculture to services and manufacturing.

*Philippines gross domestic product in U.S. dollars 1997–2001. Source: Trading Economics*

Cryptocurrencies are extremely popular in the Philippines due to the economic shift that the country went through when digital assets began to gain popularity. A recent survey has revealed that the Philippines ranks 10th in cryptocurrency adoption, with over 11.6 million Filipinos owning digital assets.

This is also evidenced in the fact that according to data from ActivePlayer.io, 40% of all the players of the popular play-to-earn (P2E) game Axie Infinity were from the Philippines. In fact, the game has also been a financial game-changer for many citizens in the country.

Cointelegraph spoke with Omar Moscosco, co-founder of AAG Ventures — a P2E guild based in the Philippines — about the potential the Philippines holds for the mass adoption of digital assets. He said, “The Philippines is home to a large unbanked and underbanked population with some 66 percent of this total population having no access to traditional banking services or similar financial organizations.”

He added that COVID-19 sparked a digital transformation in the country, saying:

“The Philippines registered the highest number of first-time users of digital payment methods at 37 percent. The regional average was 15 percent. As such, digital payments made up 20 percent of total financial transactions in the country in 2020, an increase from 14 percent in 2019. Also, in 2020, e-money transactions totaled 2.39 trillion PHP (US$46.5 million), an increase of 61 percent compared to 2019.”

Jin Gonzalez, chief architect of Oz Finance — a decentralized finance (DeFi) service provider based in the Philippines — told Cointelegraph about the impact the entry of Binance in the country would entail for the market. He said, “Binance already receives a large amount of Philippine peso volume for its peer-to-peer (PHP/USDT) service. It is also the exchange of choice for Filipinos due to the favorable rates it charges versus local service providers. Getting a BSP license will only legitimize its operation and strengthen its position in the market.”

However, global concerns have begun to emerge around the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) frameworks that companies with VASP licenses use. The central bank of Ireland has published a bulletin for VASPs that is aimed at assisting applicant firms to strengthen their VASP registration application and their AML/CFT frameworks accordingly.

This development was good for the growing ecosystem, as it addresses concerns that would inevitably arise when considering the integration of digital assets into the existing financial ecosystem and the economy. At the same time, Hong Kong introduced a licensing regime for VASPs in June this year, which imposes statutory AML/CTF requirements for companies that wish to operate in the nation.

Central government keen to push use cases

The regulatory landscape of the Philippines is still in a fairly nascent stage as there is no strict restrictive regulation for both businesses and individuals at the moment. In fact, the government of the country, in tandem with its central bank, seems keen to adopt blockchain technology and implement its use cases in various sectors of the economy. Gonzalez said:

“At the current moment, BSP regulation is in place, but SEC regulation has yet to pass. Regardless, the Philippines has an open position on digital assets, and its intent to regulate is intended to balance investor protection with promoting the advancement of the technology. PH regulators, especially the Central Bank, maintain a progressive stand on the adoption of digital assets.”

Earlier this year, in May, the Philippines government’s Department of Science and Technology started a blockchain training program for researchers in the department. Through the training program, the government is looking to adopt blockchain in areas such as healthcare, financial support, emergency aid, issuance of passports and visas, trademark registration and government records, among others.

*Cliffs at El Nido in the Philippines. Source: Tuderna*

The Philippines-based UnionBank has also launched a payments-focused stablecoin pegged to the Philippine peso that aims to drive financial inclusion in the country. It attempts to link the main banks of the country to rural banks and bring financial access to previously unbanked parts of the country. Gonzalez said:

For the time being, it seems content to observe how bank-issued stablecoins (such as PHX by UnionBank) will bring forward financial inclusion.

However, even with the openness of the government, there are entities keeping a keen eye out for irregularities in the way digital asset companies are operating. The local policy thinktank Infrawatch PH has sent a letter to the Philippines’ Department of Trade and Industry (DTI) asking them to conduct an investigation against Binance for promotions in the country without having a proper permit for the same.

The DTI responded to this letter, putting the ban out of the question by stating that it has set no clear guidelines for the promotion of digital assets.

CBDC launch could be a gamechanger for the country

Since a majority of the citizens in the Philippines are unbanked and thus operate in a fairly unregulated manner in matters like taxation, the introduction of a central bank digital currency (CBDC) into the economy could be a major step in the digital transformation that the country is currently undergoing.

Moscoso said, “CBDCs can take advantage of mobile technologies to provide increased access to financial services to rural households and other segments that are underserved by the current banking system. The central bank expects that at least half of the payments would eventually be made digitally by 2023.”

He added that around 70% of adults would be using a digital account for transactions by this time, which allows consumers to have additional options that can make them steer away from loan sharks.

Despite the current bear market, the Philippines still has a forward-thinking perspective about the adoption of digital assets and blockchain-based business models. This outlook puts the country in a good spot, with the potential to become a cryptocurrency hub.

Bitcoin trading volumes post new high in Philippines peso on Paxful

Weekly Bitcoin trading volumes in the Philippines peso grew steadily on Paxful this year and eventually hit a new high in July.

Despite some level of regulatory uncertainty around cryptocurrency in the Philippines, one platform has recorded a massive influx of Bitcoin (BTC) trading activity recently.

Bitcoin trading volumes in the Philippines have been on the rise over the past few months on the major peer-to-peer (P2P) crypto exchange Paxful.

According to data from the Bitcoin tracking website Coin Dance, Bitcoin trading volumes denominated in the Philippines peso (PHP) have been steadily growing on Paxful and eventually hit a new high in July.

Paxful’s Bitcoin trading volumes peaked at 111 million PHP ($1.9 million) during the week ending on Saturday, July 9, 2022. That was the biggest amount of PHP ever traded against Bitcoin on Paxful.

*Paxful’s weekly Bitcoin trading volumes in PHP. Source: Coin Dance*

The amount of actual Bitcoin traded on Paxful against PHP during that week was 92 BTC, slightly down from the previous week ending on July 2.

A notable influx in BTC trading started in early May, with Bitcoin trading volumes more than doubling over a period of months. As of early May, Paxful’s weekly BTC trading volumes in the Philippines amounted to just around 40 BTC.

Despite the recent upside in BTC trading volumes, the number of Bitcoins traded per week on Paxful in the Philippines is still yet to break the all-time high weekly volumes of 111 BTC posted in August 2020.

*Paxful’s weekly Bitcoin trading volumes in the Philippines. Source: Coin Dance*

The rise of Bitcoin trading on Paxful in the Philippines started amid a massive bearish trend in the cryptocurrency markets, with Bitcoin losing about 50% of its value since early May. BTC trading volumes in PHP surged even higher on Paxful after Bitcoin tumbled below $19,000 in late June.

The significant growth of PHP/BTC trading on Paxful also came amid the weakening local currency coupled with rising inflation. The Philippine central bank will reportedly decide whether to hike interest rates in mid-August amid inflation that is expected to grow above 7% by the end of the year from the current 6.1%.

The overall sentiment around crypto adoption in the Philippines has been rising in recent years as well, with many local firms moving into crypto trading. In April 2022, Philippines-based fintech firm PayMaya reportedly launched a crypto feature allowing users to trade, purchase and spend crypto on their accounts. The firm is among 19 official virtual asset service providers approved by the Bangko Sentral ng Pilipinas to offer virtual asset services.

According to Terry Ridon, a local lawyer and convenor at the Infrawatch PH think tank, the rise in crypto adoption in the Philippines is a result of the COVID-19 pandemic.

“Crypto is becoming more popular in the Philippines because the country started shifting to digital payment systems during the pandemic. The ease of entry into the cryptocurrency markets through various apps has also allowed more people to participate in the sector,” he said in a statement to Cointelegraph.

Binance ban off the cards, says Philippine trade and industry department

The Philippine Department of Trade and Industry waved off a Binance ban proposal, citing a lack of regulatory stance on cryptocurrencies from the central bank.

A proposal to ban global cryptocurrency exchange Binance from operating in the Philippines will not gather steam due to a lack of regulations towards cryptocurrencies in the country.

The Philippines’ Department of Trade and Industry (DTI) has cited no clear guidelines set out by the country’s central bank, Banko Sentral ng Pilipinas (BSP), as a dead-stop after a lobbying group called for the prohibition of Binance in early July.

Local think tank Infrawatch PH had asked the DTI to investigate Binance for the promotion of its services and offerings, which the group believes was done without the necessary permits.

Binance had looked to acquiesce the parties involved, telling Cointelegraph that it intends to secure virtual asset service provider and e-money issuer licenses in the Philippines.

Nevertheless, DTI is unable to enforce any ruling against Binance from operating in the country, according to their latest correspondence with Infrawatch PH. As reported by Forkast, the department cited a lack of legislation for virtual assets creating a gray area:

“Cryptocurrency and other forms of virtual assets are not consumer products, the Department of Trade and Industry has no jurisdiction to act on applications for sales and promotion permits to promote virtual assets per se in the absence of clear legislation on the matter.”

The DTI noted that the proposal would fall under the auspices of the country’s central bank, which has not released any official guidelines or regulations for the use or sale of cryptocurrencies in the Philippines to date. This would include any companies or service providers conducting sales or promotion activities linked to financial products.