Reported by: banking|Updated: December 7, 2020
Philippines plans to be a Silicon Valley for Blockchain & DLT development:
The Philippines is considered a fertile ground for innovations in crypto assets and blockchain technology. The most recent development is the launch by the country’s Bureau of the Treasury, the UnionBank of the Philippines, and crypto exchange PDAX a blockchain app called Bonds. ph for the distribution of government bonds. The new mobile app will allow Filipinos, particularly the unbanked, to invest in the government’s new retail treasury bonds and help the country raise funds to help with economic recovery and strengthen its response to the covid pandemic. Studies have shown that almost 77% of adults in the Philippines still do not possess a bank account.
The mobile application is particularly aimed at providing easy investment options to the unbanked population of the country. The application will allow national citizens to easily invest in retail treasury bonds for as little as 5,000 Philippine pesos. App users will be able to make instant payments using internet payment services such as InstaPay, GCash, and Paymaya. They can also pay through internet banking or over-the-counter payment through their UnionBank accounts. The transactions are recorded in a DLT-based registry in addition to the existing system.
MAS TO WORK WITH PHILIPPINES
The Monetary Authority of Singapore (MAS) has commended the efforts in creating Bonds.PH and MAS Chief FinTech Officer Sopnendu Mohanty said the blockchain community in Singapore will work together with the Philippines to share learnings, open-source resources and also facilitate connecting corresponding nodes to integrate market infrastructure for transparency and interoperability.
UnionBank, one of the largest banks in the country, had earlier installed a bitcoin ATM, and its subsidiary UBX had invested in the PDAX exchange.
The Philippine government is keen to make the country, especially, the Northern Philippines, the Silicon Valley of the Asian continent. The effort is to make the Cagayan Economic Zone Authority into a center for blockchain, and cryptocurrency firms, and the area has bountiful of required skilled manpower, who can easily engage with the world’s leading cryptocurrency companies and pave the way for the next generation of innovations. Many enterprises in the country are also joining hands with other offshore companies to provide cryptocurrency solutions, blockchain technology, and ultimately convenient financial technology. There are some 21 offshore companies that offer fintech and blockchain services and are ready to expand their operations in the Cagayan Economic Zone and in the next 2 years over $40 million in investments are expected from these companies. There are plans to create a technological garden in Cagayan Valley.
The Philippines has 16 cryptocurrency exchanges regulated by Bangko Sentral ng Pilipinas, the country’s central bank. The BSP established a formal regulatory framework for crypto exchanges in February 2017 and crypto exchanges are required to register with the BSP as remittance and transfer companies.
Meanwhile, the Asian Development Bank’s Trade and Supply Chain Finance Program has successfully completed its first credit guarantee transaction using DLT in partnership with Standard Chartered Bank Thailand and the Bank for Investment and Development of Vietnam (BIDV). The transaction financed a $50,000 shipment of plastics from Thailand to Vietnam in August and was supported by Contour, a Singapore-based company, which facilitates trade finance digitization. ADB’s Trade and Supply Chain Finance Program offers guarantees and loans to boost trade in Asia and the Pacific.
BLOCKCHAIN IN SCF
Going back to UnionBank, the bank is working with IBM on a blockchain-based solution that has the potential to reinvent supply chain finance by enhancing security, transparency, and operational processes. The cloud-based application, one of the first projects of its kind in the Philippines outside of traditional banking, is designed to transform trade finance transactions through a permissioned distributed ledger. Built on the IBM Blockchain Platform, the solution will be available to all the bank’s customers and partners who will join the blockchain network. Once a part of the network, all parties involved in a transaction can act on the same shared ledger, with each party updating only their part of the process, while safeguarding sensitive information. The new solution also enables more suppliers to access credit, with the goal of driving greater financial inclusion throughout the supply chain.
The Philippines has several enterprises developing blockchain technology. Leading among then are Coins. PH, a platform that facilitates online shopping, paying bills, buying game credits, getting digital currencies, and making P2P wallet transfers; Appsolutely, a platform aiming to help businesses to improve relationships with their customers; BlockchainSpace, the first co-working space dedicated to DLT in the country, and bringing fintech companies together throughout the whole Southeast Asia; BloomSolutions, a startup that allows its clients to transform remittance business; and MergeCommit, a DLT software development company that also provides such services as crypto exchange and runs Andromeda, a decentralized exchange.