Binance’s Changpeng Zhao describes the Philippines as “one of the most active crypto communities in Asia” and is the perfect way to sum up the country’s mix of high adoption and relatively low prosperity.
With a GDP purchasing power of less than USD 10,000 per capita per year, this nation of 7,100 islands does not contribute significantly to the global exchange volume. In terms of everyday use and buzz, a significant segment of Filipinos seem to be jumping straight from a cash-based economy into the future of fintech.
The country has 17 licensed digital currency exchanges, and tens of thousands of pawn shops and convenience stores are happy to accept cash deposits and withdrawals for various crypto exchanges and apps. You can buy Bitcoin with cash at any of the 3,000 7 / Elevens in the country through Abra, and one in seven adults uses the blockchain-based crypto and digital payment app Coins.ph. This is a market penetration comparable to some of the most famous payment apps in the world.
Crypto regulations are clearly defined and generally cheap, and special economic zones such as the “Crypto Valley of Asia” in Cagayan and the Clark Freeport Zone compete for international blockchain projects. In fact, the International Monetary Fund has named the Philippines one of the top ten countries in the world to develop a blockchain or cryptocurrency project. Because of the widespread high-level English language skills and relatively low wages, Filipino workers have also become a preferred choice as remote workers for blockchain projects.
Exchange cash for crypto
The growing acceptance of fintech and blockchain is based on an urgent need for modernization as well as on everything else. It’s still a cash-based society, with 71% of adults not having a bank account. Even before the pandemic, one in five people lived below the poverty line. Many were dependent on cash and lived by the day.
But with cell phone connections more active than humans, there are great opportunities to change the game. By 2019, 10% of the population were already using cryptocurrencies to make payments. Leah Callon-Butler, the director of Emfarsis Consulting in Clark, says fintech can dramatically change life in the country:
“People just say, ‘Whoa, amazing – that saves me half a day because I don’t have to drive all the way to the bank during business hours and take three trips on public transport and then stand in line for an hour and collect it damn thing and then go all the way home. I could do this on my phone. “
Callon-Butler was without a bank account when she arrived in the Philippines in 2018 to work on an international crypto project with local staff. Like many others, she turned to the blockchain-based Coins.ph platform. “Coins.ph changed my life,” she says, adding, “I realized that I could use it to deposit Bitcoin or Ethereum and buy mobile charges, pay bills and send money to other people. It was just a lifesaver.” It is very easy to use and very customer oriented. “
Crypto makes life easier
In the past two years alone, Coins.ph claims to have doubled The user base is 10 million people out of a total population of 72 million adults. The company, founded in 2014, wants to simplify digital transactions. Users can quickly sign in with a mobile phone, email address, and ID selfie, then withdraw or deposit cash with 33,000 retail partners. The app offers banking, billing, wire transfers and online purchases in pesos or cryptocurrency.
A company spokesperson told the magazine that since the pandemic began, more people have been using the platform: “We’re seeing a positive shift as digital payments become more prominent – a trend accelerated by the global pandemic,” they added, “Always more people are adapting to crypto, online banking and more. “
Blockchain also helps to undercut the high cost of money transfers. Around 10% of the Philippines’ GDP comes of the 10 million Filipinos overseas who work overseas and send money home to support their families. However, sending funds over traditional routes comes with heavy fees – an average of 6.9% for a $ 200 transfer – and provides a great market opportunity for companies like PDAX, BloomX, SendFriend, Rebit, and Coins.ph to make money for a fraction the cost of transferring crypto that can be withdrawn as cash in thousands of stores. The speaker says:
“We see growing user interest in using crypto as a convenient option for transactions – especially cross-border. We see digital transfers – including blockchain-based transfers – as a significant opportunity. COVID-19 is a key driver of the growth that we are see, but we assume that this trend will continue beyond the pandemic. “
Coins.ph would not provide a breakdown of the number of users transacting in cryptocurrencies compared to those using fiat. Mike Mislos, founder of Bitpinas’ local crypto news website, estimates that this is a significant proportion. “I’m also part of some groups on Facebook and how half of the people use it for normal financial transactions and half of the people use it for cryptocurrencies too,” he told the magazine.
2023 goals you can rely on
The rise in user numbers at Coins.ph is related to a broader drive to overtake the economy. Bangko Sentral ng Pilipinas has recognized how inefficient the current cash-based economy is without banks and unveiled an ambitious roadmap for 2023 with the goal of getting 70% of citizens into a bank account and converting 50% of private customer payments to digital payments.
The pandemic has accelerated progress on this front due to the restrictions on “general community quarantine” and “extended community quarantine” that have kept many people at home since March. Around 14 million people in Manila have been subject to strict rules for almost eleven months. The last deadline expires and is expected to be extended again on January 31st. Half a million cases and just under 10,000 deaths have been recorded in the Philippines.
“It appears that the destination has been accelerated due to the pandemic, as there is absolutely no choice but to conduct the transactions online due to the lock,” Mislos explained.
Bigger than payments
However, the local blockchain industry is not limited to just exchanges and transfers. There is a payroll service Paylance, Real estate transaction platform Qwikwireand a coworking space BlockchainSpace, which also offers industry events and training. Manila Gaming Company Height games is quickly becoming a local leader in blockchain-based virtual worlds and creating NFT-based ones Battle Racer Game for Decentraland and has Fungal mania in development for The Sandbox.
One of the most famous companies is Satoshi Citadel Industries The company has been developing its blockchain ecosystem since 2014. Services include crypto purchases for transfers (Rebit) as well as a wallet (Buy Bitcoin, BTC Wallet) and an international share buying platform (Keza).
Even Binance is rushing into the Philippines after hiring Colin Goltra, Coins.ph’s former head of cryptocurrency, as country director Start P2P Bitcoin trading pesos in the summer of 2020. Binance also acquired a local payment company Swipe to launch crypto for fiat credit cards in different regions of the world.
According to Mislos, there was likely more interest in crypto in the Philippines than anywhere else in the region, with the exception of Singapore and Vietnam. He cites favorable regulations as the reason, including a regulatory sandbox for emerging companies. “I think more people are interested in cryptocurrencies than other countries here in Southeast Asia,” he says, adding:
“The central bank regulations are more welcoming. I don’t think there are many more countries in the world that currently have as much potential and regulatory clarity as the Philippines. “
In July, Union Bank teamed up with Exchange PDAX to make this possible Everyone, including non-banks, invest in government bonds with just $ 100 on blockchain at Bonds.ph. The government is also in the process of enacting fine-grain regulation through the Blockchain Digital Technology Act.
But not everything is in full swing for the cryptocurrency in the Philippines. While the central bank has been seriously considering a CBDC, or “digital peso,” it recently put on hold plans to launch one until at least 2023.
There was also significant excitement in 2018 over a partnership between a developer and the Cagayan Economic Zone Authority to create theCrypto Valley of AsiaLocated about 400 km north of Manila. While dozens of international blockchain and fintech companies reportedly got licenses and was an $ 80 million airport announced At the beginning of 2020 it has become quiet in the last few months.
“During this pandemic, I don’t think they can focus on that,” says Mislos. “But the last time I checked they were still on.” So it seems that this is going to be a long term project with three phases planned over a ten year period.
What’s up this year?
Will the country’s fortunes improve this year when 2021 is already ahead of us? Unfortunately, the signs at Moody’s Analytics don’t seem so promising Predictions Due to the “deep recession and uncertain fiscal support from policymakers”, the Philippines will be the last country in the Asia-Pacific region to recover from the economic impact of the pandemic.
The Philippines are adding to their suffering stuck his Covid-19 relief is hoping for 50 million doses of the Chinese-made Sinovac According to reports not only is it less effective than other vaccines, but only a third of Filipinos are willing to take it. Right now, the move to remote working and digital transactions seems more of a necessity than a choice.
Part two of our special report “Crypto in the Philippines” is coming out next week and deals with the ethics of hiring Filipino offshore employees for international blockchain projects.