Published: January 24, 2025 at 8:36 am
Updated on January 24, 2025 at 8:36 am
It seems like several major Filipino banks are gearing up to introduce a new stablecoin called PHPX, and they’re doing this through Hedera’s Distributed Ledger Technology (DLT) network. From what I’ve gathered, this could change things for Filipinos sending money back home from abroad, especially when it comes to remittances.
Union Bank, Rizal Commercial Banking, Cantilan Bank, and the Rural Bank of Guinobatan are in it together, along with some help from a Singapore startup called Just Finance. So, it’s a pretty hefty lineup.
Now, here’s where it gets a bit technical. PHPX is governed by a consortium of banks and Just Finance, which means it’s not a decentralized stablecoin managed by some DAO. Instead, these banks have a say in how things are run.
As for the network, it’s permissioned. Only authorized participants can validate transactions. So, you won’t find any random players in this game. It’s all controlled, unlike the free-for-all seen with some decentralized stablecoins on public blockchains.
The Philippines, being a big receiver of remittances, could really use this. The country gets over $40 billion a year in remittances, which is a whopping 10% of its GDP. So, clearly, this money matters.
The current remittance system is slow and often expensive. But PHPX aims to speed things up and cut costs. The idea is that Filipinos abroad can send funds straight to their family members’ bank accounts or digital wallets, for things like school fees. It’s about making it easier and letting senders have a say in how their money is used back home.
On a domestic level, PHPX could also be a more efficient option for point-of-sale payments, but we’ll see how that plays out.
Now, let’s talk about currency. Cross-border payments usually mean converting currencies, which is where PHPX steps in with a multi-currency stablecoin exchange. They plan to allow users to swap PHPX with other foreign currency stablecoins—like USD, SGD, or JPY. This will depend on liquidity providers, who might be the banks involved or other investors.
The system’s meant to be compliant with regulations, which is a plus. And they’re keeping those reserves safe in trust accounts that hold government bonds, so it’s not like the money’s just floating around.
Now, onto the sticky part. PHPX is designed to comply with regulations from the Bangko Sentral ng Pilipinas (BSP) and European MiCAR or similar regional regulations. They also follow the Basel Committee’s rules, classifying it as low-risk. But this kind of compliance is not what you’d find with more decentralized stablecoins.
The regulatory landscape for crypto is a hot mess. Different countries have different takes, and even within the same country, regulations differ. Just look at the U.S. with the SEC and CFTC both claiming jurisdiction.
PHPX may also have to deal with lots of licensing and chartering requirements. And as we know, these rules are always changing, making things even more complicated.
Consumer and investor protections are also a big focus. This means PHPX has to have a solid plan against fraud, cybersecurity issues, data privacy problems, and money laundering. These protections are becoming stricter, so staying compliant is a must.
Then there’s the whole securities vs. commodities debate. Depending on how this goes, PHPX could face a storm of regulatory issues.
Anti-Money Laundering (AML) and Know-Your-Customer (KYC) requirements are also on the list. These are getting tougher, and not following them can be a real headache.
Cross-border regulations are another minefield, with varying definitions and rules in different countries.
How does this affect crypto enthusiasts? Well, PHPX is backed and managed by regulated banks, and it’s all about compliance. So yeah, it’s a bit more centralized than what some crypto fans would probably want.
Using Hedera’s permissioned network adds to this centralization. It’s compliant with international financial regulations, which some might see as a sellout.
That said, they say they plan to decentralize PHPX in the future. So, maybe that will attract those who want something less controlled.
The banks’ involvement could help with financial inclusion, but it also muddies the waters between traditional banking and crypto.
In short, PHPX could be a big deal in the digital currency exchange platform game. With the Hedera DLT network and a centralized governance structure, it’s trying to offer faster, cheaper remittance services. The multi-currency stablecoin exchange is a plus, and they’re keeping things legal.
Sure, the centralization and bank ties may make it less appealing for some, but if they decentralize down the line, it could have a broader reach. We’ll see how this all shakes out.
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