Crypto in Manila, how to educate, innovate and regulate?
With the launch of the Blockchain Association of the Philippines, Duterte's administration walks the fine line between crypto adoption and regulation
The Philippine government has announced the launch of the country’s first blockchain-related organization, the Blockchain Association of the Philippines, as the country looks, like many others across Asia, to step over the fine line between adoption of the new technology and regulation.
The organization, that is being driven by the sector-leading Union Bank of the Philippines and led by bank chairman Justo Ortiz, will be formally launched at the Manila Blockchain Applications and Economics Forum on May 28.
Ortiz told a press conference on Monday that while there are huge opportunities for blockchain technology in the country, educating Filipinos is critical for the industry’s domestic growth. Union Bank now employ 30 blockchain programmers, added Ortiz, but aims to take on 25,000 more over the next two years. Education will be the core mandate of the association, said Ortiz.
Joining Ortiz was Ramon Vicente de Vera, the head of the bank’s Fintech Business Group, who announced the roll-out of the bank’s Project i2i, which intends to use blockchain technology to interconnect five rural banks to national and international payment networks. The project – that will allow customers to access fund transfer, remittances and other payment systems through 3,000 rural branches that are now disconnected from international banking – will be live by July, said de Vera.
Union Bank has been proactive in its support of blockchain, Bitcoin and digital currency payment systems in general. Earlier this month it said it was considering becoming the first Philippine bank to accept crypto-currencies as payments, while in January, the bank launched what it said was the country’s first direct blockchain-based payment system for businesses.
In a partnership with Visa, the platform allows fund transfers to be completed in less than 24 hours, instead of three to five days using conventional channels, while transaction fees would “decrease significantly.” The service is said to be fully operational by the end of 2018.
Now the Philippine central bank, that regulates virtual currency exchanges in the country, has not endorsed the use of crypto-currency, but in April, the Philippine government announced it would allow 10 blockchain and virtual currency companies to operate in its Cagayan Special Economic Xone.
These companies have to invest at least $1 million into the freeport over two years, pay up to $100,000 in license fees and generate local employment and in return get tax advantages and licenses that allow them to mine crypto-currencies, run initial coin offerings or open crypto-to-crypto exchanges. The exchange of money into virtual currency, and vice versa, will still need to be carried out offshore to comply with Manila’s existing financial regulations.
The economic zone, that says it is also aiming to open a blockchain and financial technology university, has in recent years become a gambling industry cluster that hosts back office facilities and technology and server centers for dozens of global online gaming operators, especially those with roots or connections with the Chinese gambling enclave of Macau.
Cagayan has been looking to diversify in recent months after Philippine President Rodrigo Duterte’s administration has repeatedly tried to tighten regulations and administration on the zone after accusing it of being rife with corruption and money laundering as well as hosting numerous illegal unlicensed gambling operations.
If the introduction of crypto-currencies into the Cagayan freeport economic mix will help Duterte better achieve this clean-up so far remains to be seen.
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