Philippines gives go-ahead to cryptocurrency exchange zone
The bitcoin exchanges and cryptocurrency businesses of the Philippines outperformed traditional financial platforms in popularity and user activity in the first six months of this year, reports CCN.
The report comes as the Cagayan Economic Zone Authority (CEZA), a government-supported economic zone in the northern part of the Philippines, gives the green light for up to 25 cryptocurrency exchanges with friendly regulations and tax policies.
At least 21 offshore financial technology firms have so far signed memorandums of understanding (MoU) with CEZA, which aims to become the “Silicon Valley of Asia.”
To operate in CEZA, cryptocurrency exchanges will be required to undergo a strict verification process by local financial authorities and CEZA before receiving various benefits that provide regulatory flexibility.
CEZA chief Raul Lambino said recently that exchanges within the economic zone will need to demonstrate their capability of investing at least $1 million and building new headquarters in the area.“We do not want the Philippines to be a haven for scammers even if these scams are happening abroad,” he said.
Any proposed initial coin offerings (ICOs) would be closely scrutinised to check whether they were asset-backed and Philippines residents would be unable to invest “because we are going to block their (exchanges’) IP address.”
“That’s why through our probity and integrity check we can determine if their transactions are just designed to entice unsuspecting people to invest in Bitcoin or whatever crypto coin that is a fraud.” Lambino added.
Ceza’s decision to properly license and oversee cryptocurrency exchanges is the first major step the Philippine government has taken to facilitate growing demand towards the blockchain sector since it recognised cryptocurrencies as a remittance method in February 2017.
Central bank caution
The Philippine government was among the first authorities to officially recognise digital assets as a form of money and legitimise the cryptocurrency sector. At that time, the country’s central bank, the Bangko Sentral ng Pilipinas (BSP), said that while it does not directly endorse bitcoin and other digital assets, it will recognise virtual currencies as a means to deliver financial services and payments.
At the beginning of this year, the bank’s deputy governor Diwa Guinigundo cautioned investors to be aware of the risks of investing in bitcoin after the cryptocurrency reached record highs in late 2017. Asked if bitcoin had a future in the Philippines in 2018, Guinigundo responded: “I don’t think so. It is something that people will need to understand very closely.”
The bank is continuing to review the potential inclusion of virtual currencies in the country’s digital financial transactions. “We are still on the initial phase of building the ecosystem of the National Retail Payment System (NRPS),” said BSP deputy director and NRPS project head Raymond Estioko. “For now, we don’t want these cryptocurrencies to mingle with the currencies we have.”
Despite its caution, the BSP is currently processing applications from 29 cryptocurrency exchange firms. Local start-up Coins.ph is already one of Asia’s leading cryptocurrency exchanges and businesses, expanding to Malaysia and Thailand as Coins.th and Coins.my, and attracting a $10 million investment from South Africa-based internet group Naspers.