The Bangko Sentral ng Pilipinas (BSP) and the Philippine Digital Asset Exchange (PDAX) are supporting the creation of a crypto-and-fintech sandbox that intends to spur innovation and technological advancement in this space.
The move is also in response to the growing public interest in alternative investment platforms such as cryptocurrency, notably due to the clear shift from traditional to digital financial services.
During the recent virtual forum “The Philippine Financial Sector: Policy Perspectives and Trends,” which was held by the European Chamber of Commerce in the Philippines (ECCP) and the Fintech Philippines Association (FPA), Nichel Gaba, Founder and CEO of PDAX, one of the country’s largest and pioneering cryptocurrency exchanges, explained the importance of building what he called a regulatory sandbox for the digital asset space.
“In a regulatory framework, a startup or an entity can test an idea rolling out a product to the market but within the parameters prescribed by a regulator.This framework or sandbox environment ensures that innovative initiatives flourish, while ensuring consumer protection, data privacy and cybersecurity, and that all such technology readily complies with applicable laws and regulations. The private sector and regulator can create an ecosystem for these initiatives,” Gaba said.
He also welcomed collaboration with the BSP in developing and launching initiatives that can increase public participation in the fintech and digital asset spaces while protecting their welfare.
“The BSP is one of the global leaders in this space, and we are honored to work with them into nurturing fintech advancements that can help our public make worthy investments, build their income and savings, and plan for a secure future,” he said.
BSP Governor Benjamin Diokno acknowledged that nascent financial technologies and the legal framework that supports it have to be cultivated in order to support the Philippine economy which has remained resilient despite the pandemic,and is expected to experience 6.5 to 7.5 percent growth by the end of the year. The banking sector itself remains robust with its industry assets also expected to grow by 6.1 percent year on year.
“As a result of the pandemic, we have seen an increase in use of the fintech platforms. The crisis has rapidly reshaped not just the financial system but also the way we interact and how we do business.” He cited as examples the recent surge in the volume of transactions of the two interbank fund transfer services that the government launched: Pesonet reaching P367 billion and Instapay climbing up to P177 billion by the end of 2020,” Diokno said.
Amor Maclang, ECCP’s Innovations Committee Chairperson and FPA’s Executive Director, said the Philippines is currently on the 3 top countries in the world that is experiencing heightened activities and greater membership enrollment in crypto platforms.
“Despite the economic contraction, there is a newfound liquidity among consumers who are asking, ‘Where do I put my money so I can yield the best results?’ With the Philippines currently among the top, the demand has outpaced the system,” Maclang said.
Francesca Montes, UnionBank of the Philippines VP, mentioned that her company’s Bonds.ph gave another fintech investment option for the public: an app, running on blockchain technology, that enables its users to buy and sell Philippine retail treasury bonds.