'Strong Affinity' To Digital Solutions Makes Philippines Southeast Asia's Most 'Pro-Crypto' Country: Expert

The Philippines has been dubbed as the most "pro-crypto" country in Southeast Asia, and a cryptocurrency expert believes that this can be attributed to Filipinos' "strong affinity" for digital innovations, along with Manila's more open approach to regulating the technology.

"Filipinos have demonstrated a strong affinity for technology and digital solutions. The widespread use of smartphones and the internet has made it easier for people to open e-wallets and engage in token transactions," said Arlone "Paul" Abello, a crypto market analyst, investor, and CEO of the crypto mentoring community Global Miranda Miner Group (GMMG), in an interview with the International Business Times.

The widespread affinity for smartphones and internet adoption has also enabled Filipinos to earn money through Axie Infinity Shards (AXS), the Ethereum token that fuels the blockchain-based game Axie Infinity.

According to the 2022 Global Cryptocurrency Adoption Index by Chainalysis, the Philippines holds the No. 2 position in the overall index ranking, trailing only behind another Southeast Asian nation, Vietnam.

A significant factor that influences the "pro-crypto" environment in the Philippines is the government's "relatively open" approach to cryptocurrency. Robert De Guzman, General Counsel and Head of Legal and Compliance at the crypto exchange Coins.ph, has written that following FTX's collapse, Washington could potentially glean some insights from the Philippines' regulatory approach, which focuses on monitoring companies to ensure compliance, as opposed to pursuing a "regulation by enforcement" strategy.

Apart from a distinct regulatory approach, there's also the apparent support of the central bank for the adoption of digital assets. Bangko Sentral ng Pilipinas' (BSP) goal to convert 50% of the country's retail payments into digital transactions by the end of 2024 has reinforced the concept of "regulatory tolerance."

Nevertheless, the absence of "clear and prescriptive" regulations in cryptocurrency exchanges may also serve as a "bottleneck" in expediting adoption, as noted by Abello, who also serves as the CEO of Web3 learning platforms Elite University and FEASTGold.

In June, the Philippine SEC postponed the issuance of regulatory frameworks for digital assets. SEC chairperson Emilio Aquino said the delay was due to the need for further research into the collapse of FTX in 2022. The commission wanted to ensure that sufficient safeguards were established for the domestic cryptocurrency sector.

International Monetary Fund (IMF) experts have said that implementing the "right rules" will not only provide a safer and more expansive environment for innovation to key players but will also safeguard the interests of investors. Regulatory frameworks are crucial in instilling consumer confidence, particularly in the Philippines, where recent years have seen an alarming rise in crypto-related scams.

Meanwhile, the BSP (Bangko Sentral ng Pilipinas) remains committed to advancing its Central Bank Digital Currency (CBDC) project, known as Project Agila. Just last week, the central bank announced the selection of Hyperledger Fabric blockchain as the technology underpinning its wholesale distributed ledger technology (DLT) for the pilot project.

"By the end of Project Agila, the pilot participants are expected to have a clearer understanding of CBDC technology and assess the capability of wholesale CBDCs to foster advancements in the large-value payment system. The results of the assessment are seen to guide the BSP and the industry on a possible launch of wholesale CBDCs in the Philippines," Eli M. Remolona Jr., BSP Governor, said.

Participating financial institutions in the initial phase of the project include Rizal Commercial Banking Corporation, Union Bank of the Philippines, Land Bank of the Philippines, China Banking, BDO Unibank, and the digital payments company Maya.

Beyond the realm of finance, several of the country's leading universities have embraced cryptocurrency. Ateneo has established what it proudly calls the "first university-based blockchain research lab," while Silliman has opened its doors to service providers that accept Bitcoin transactions.

Abello said the increasing interest of educational institutions in crypto and blockchain only indicates that universities are eager to prepare the next generation of Filipino corporate and business leaders for the inevitable transition of the Philippines into a crypto country.

President Ferdinand "Bongbong" Marcos Jr. seems enthusiastic about promoting a digital revolution in the country. During his State of the Nation Address (SONA) in 2022, he asserted that the Philippines "cannot remain idle" in the face of an "unprecedented" global technological and digital movement. Observers have said the administration's digital reforms could ignite a digital transformation in the country, potentially propelling the Philippines into a global crypto hub.

As part of the government's efforts to generate more interest in crypto and blockchain, the Department of Science and Technology (DOST) has initiated a blockchain technology seminar program for select science research experts across the department's various R&D institutes.

The Philippines currently leads alongside Vietnam in Southeast Asia's crypto space, but Abello noted that there is a need for more "voice, structure, and leadership" in the Philippine crypto ecosystem. Collaborative discussions addressing common issues among stakeholders could further expedite crypto adoption in a country projected to expand its internet economy from $17 billion in 2021 to $40 billion by 2025.