August 24, 2022 – Over the last few years, the crypto industry has seen a rise in interest within the Philippines. Digital assets continue to attract Filipinos, with transactions back in the first half of 2021 experiencing a 362% increase. These developments are front of mind for the country’s financial sector who are exploring ways to embrace these new developments and innovations and specifically on how best to regulate digital assets including cryptocurrencies.
In a Senate hearing with the Committee on Banks, Financial Institutions & Currencies chaired by Honorable Mark A. Villar, government institutions like the Banko Sentral ng Pilipinas (BSP), the Security Exchange Commission (SEC) and the Cagayan Economic Zone Authority (CEZA) sat down with private entities including Binance and the FinTech Alliance Philippines to discuss key initiatives in putting together policies and guidelines for fintech and digital assets. Central to the discussion was how the Philippines can harness new innovation while ensuring the appropriate guardrails are in place necessary for consumer protection
BSP’s Deputy Governor, Chuchi Fonacier, outlined its sandbox approach to regulation. The approach is designed to not hinder or stifle new innovations in financial technology. The same approach has helped drive the growth of fintech and the digital payments sector especially in areas of user protection including Virtual Asset Service Providers or VASPs.
Part of the initiative is to conduct research into the formation of digital asset policies in an ongoing effort to keep up with the latest developments in the FinTech space. SEC Chairperson Emilio Aquino highlighted the need to be also active in enforcing security measures against digital asset-related misconduct.
Senator Sonny Angara questioned if Cease and Desist efforts are enough to implement necessary enforcement against illicit use of digital assets. The honorable senator points out that the websites in which these activities take place are made available globally on the internet.
The existing policy regime stresses flexibility in developing and adapting regulations and while the department is still catching up to new developments, they are actively performing their mandate of looking into digital assets.
Industry representatives were also present during the senate hearing. Binance, the global blockchain company behind the world’s largest cryptocurrency exchange, was represented by its APAC Director, Leon Foong, and General Manager for the Philippines, Kenneth Stern. Together with CEZA’s FinTech and Cryptocurrency officer Mike David and Fintech Alliance’s Chairperson Lito Villanueva, the industry representatives were all in agreement that a proper regulatory mechanism is necessary for the growth of the industry that fosters innovation.
Kenneth Stern, Binance’s General Manager for the Philippines, shared: “We strongly believe that the crypto industry can greatly benefit the Filipino people through addressing the necessity of financial inclusion through digitalization. 78% of Filipinos remain unbanked, but crypto can help decrease that number as crypto asset holders will soon surpass the number of credit card holders in the country.”
Industry players provided critical insights for the committee and the active steps being taken to put in place measures that address concerns around safety. Binance specifically highlighted their policies around user protection and security which are some of the strictest in the fintech industry. Key security features are embedded at all stages of a user’s experience including strict Know Your Customer (KYC) process, active collaboration with global law enforcement and banking agencies, and the strict evaluation process of digital assets offered on the exchange.
Providing financial literacy was also agreed to be a foundational driver for ensuring user protection. Binance has already rolled out a partnership with Philippine universities and professional groups offering free courses in blockchain technology, crypto currency, web3, trading, the metaverse, and decentralized finance (DeFi).
Binance, CEZA and the Fintech Alliance all expressed support to the ongoing efforts by the BSP and SEC to develop a framework that will identify and regulate digital assets like cryptocurrency.