Digital Currency Licenses Granted to Two Filipino Bitcoin Exchanges

Two digital currency exchanges in the Philippines have been granted licenses from the Philippines central bank.

In a report from local publication, The Philippine Star, the Bangko Sentral ng Pilipinas (BSP) has approved the registration of two bitcoin exchanges in the country. According to the report, the move is part of efforts to regulate the fast growing market and the ‘risky’ cryptocurrency industry.

Speaking at a FinTech Thought Leadership Roundtable Series presented by FINTQ, Nestor Espenilla Jr., the central bank’s chief, said:

“We see a rapid increase in the trajectory. It is coming from a small base but increasing that is why we decided to require them to register.”

Espenilla also provided figures on the local bitcoin trade. According to him, the bitcoin trade volume has more than doubled. In 2016, the figure was only around $2 million per month. However, exchanges are now seeing trading volume exceed $6 million each month.

He added:

“That is the importance of putting them under the regulatory framework. They have to comply with it. We are moving to regulate them.”

Rules on Bitcoin Exchanges

This move comes months after the BSP released new rules for bitcoin exchanges operating in the country. In January, it was reported that the central bank would treat digital currency exchanges as a type of remittance company.

At the time, the BSP said:

“The Bangko Sentral does not intend to endorse any [virtual currency], such as bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity. Rather, the BSP aims to regulate [virtual currencies] when used for delivery of financial services, particularly, for payments and remittances, which have material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability.”

At the end of December last year, it was reported that the Philippines government was discussing whether to regulate digital currencies. As the number of Filipinos sending money back home using bitcoin increases the government is keen to provide protection.

Ranking as the world’s third largest remittance receiver, the Philippines saw around $30 billion into the country in 2016. Amounting to nearly 10 percent of the country’s GDP, the Philippines has an ideal opportunity to make use of bitcoin.

At the time, Espenilla said that the number of transactions related to the digital currency was increasing. Yet, while the central bank was interested in digital currency exchanges, the threat of money laundering remains.

Espenilla stated:

“We are studying putting virtual currency exchange operators under a more formal regulatory framework.”

Help or Hindrance?

The Philippines is certainly no stranger to the digital currency bitcoin. In 2015, the country received its first two-way bitcoin ATM, located in the heart of Manila’s financial district. According to CoinRadarATM, the country now has four bitcoin ATMs.

This steady growth illustrates where the market is going as bitcoin gains dominance. Yet, while this is the case, could the regulations help or hinder bitcoin startups in the Philippines?

This was a question that was asked back in February by Luis Buenaventura, CTO of BloomSolutions, a Philippines-based remittance firm. According to Buenaventura, while there may have been initial outcry at the move, optimism should be looked at toward the changes.

Buenaventura said:

“It’s good news that the government is finally recognizing startups that have been laboring in a legal gray area since 2013. It’s also encouraging that they’ve spent enough time to learn about bitcoin to understand what it’s good at.”

However, while it may be some time before the full impact is understood, it’s hoped that it won’t deter innovative in the country, which has built up over time.

Japan Regulates Bitcoin

News of the Philippines central bank approving the registration of two bitcoin exchanges follows similarly to Japan.

In April, Japan made changes to its regulations to see bitcoin as a legal form of payment similar to prepaid cash cards and gift certificates.

Not only that, but the country put an end to an eight percent consumption tax on transactions of bitcoin bought by digital currency exchanges. When it went into effect in July, it helped to push the currency’s price up. Since then the country has continued to fuel demand for bitcoin.

In response to the increased demand in the cryptocurrency over 10 digital currency exchanges have launched. The aim is to capitalise on this surge within Japan.

This, however, shouldn’t be hard. It’s reported that by the end of 2017 there will be as many as 260,000 retailers accepting bitcoin. According to Midori Kanemitsu, chief financial officer at bitFlyer, that number ‘is expected to rise to 300,000 or so in 2017.’

Bitcoin’s Value Rises

Since the beginning of 2017, bitcoin’s price has quadrupled. In January, it was worth $1,000. At press time, on the 21st August, it’s trading at $4,028. Over a 24-hour period it has dropped its value by 2.08 percent. In seven days its value has decreased by 5.33 percent.

Just last week the currency was nearing the $4,500 mark; however, it fell short of this reaching $4,482. It’s believed that some traders may have sold their coins to enjoy the profit they would have made.

Despite this drop in price, though, demand remains for the currency. So much so, that the initial jump to $4,000 was down to strong Japanese interest. Geopolitical turmoil in North Korea is believed to have been a factor as well.

With a major selloff in bonds and stocks taking place, investors are turning to bitcoin as a safe haven. It remains to be seen how much further the digital currency can rise.

One trader has speculated that it will reach $15,000 before the end of 2017. Others, however, are a tad more bearish. Ronnie Moas, Standpoint Research founder, thinks its price will rise to $7,500. This is a revised figure from his previous $5,000 prediction. And yet, there are some who are predicting figures as high as $100,000.

One thing remains, though, even though the digital currency’s price may rise and fall, people are still confident as to where it’s going. There will continue to be critics along the way, but the currency has now reached a stage of maturity that prices remain relatively stable during shifts in the market.

Featured image from Shutterstock.

India’s Government Report Expected in July, Bitcoin Ban Unlikely

An Indian intergovernmental committee tasked with looking into whether digital currencies such as bitcoin should be regulated is due to submit its report at the end of July.

Earlier in February, the Reserve Bank of India (RBI) issued a statement regarding its stance on bitcoin, stating that it would be the public’s responsibility for the risks they take when dealing with digital currencies.

The bank said:

“The Reserve Bank of India advises that it has not given any license/authorisation to any entity/company to operate such schemes or deal with bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with virtual currencies will be doing so at their own risk.”

As a result, in April the government established an interdisciplinary committee to examine the existing frameworks regarding digital currencies which have ‘been a cause of concern.’

Back in 2013, the RBI voiced its concern on digital currencies cautioning those who hold the currency to be aware of the risks they are exposed to.

This was followed up by a call from Kirit Somaiya, a member of the Indian Parliament who belongs to the Bharatiya Janata Party (BJP), a right-wing party in India, declaring that bitcoin should be made illegal.

Yet, despite this, a petition from within the Indian bitcoin community is urging politicians and lawmakers to deem digital currencies as legal, claiming that they provide the country with opportunities for innovation and development.

According to the petition, which is due to be delivered to Arun Jaitley, India’s Finance Minister, Dr Urjit R Patel, the Governor of the RBI and Shri S Selvakumar, the Joint Secretary of the Ministry of Finance, it could save India US$7 billion by employing cryptocurrencies for inward remittances at the same time as providing the poorest Indians financial inclusion at low costs.

Before the release of the report next month, the Committee is tasked with:

  • Determining the current position of virtual currencies in India and worldwide;
  • Looking into existing global regulation and legal frameworks surrounding virtual currencies;
  • Putting forward measures that will deal with customer protection, money laundering, etc. when dealing with virtual currencies; and
  • Delving into any other matter regarding virtual currencies that may be relevant.

In addition to discussing with government ministries and the bitcoin community in India, the Committee has also taken into account public opinion in the country.

In May, India’s Ministry of Finance opened a government portal where the public could submit their comments on the market. The public had until the 31 May to submit their thoughts on where they believed the market could head.

More specifically, the government sought answers to the following:

  • A) Whether Virtual Currencies (VCs) should be banned, regulated or observed?
  • B) In case VCs are suggested to be regulated:

 

  •  i) What measures should be taken to ensure consumer protection?
  • ii) What measures should be taken to promote orderly development of VCs?
  • iii) What appropriate institution(s) should monitor/regulate the VCs?

 

  • C) In case VCs are not suggested to be regulated:

 

  • i) What should be the effective self-regulatory mechanism?
  • ii) What measures should be adopted to ensure consumer protection in this scenario?

Public results have found that around 80 percent are supportive of digital currencies while 10 percent have decided to remain neutral. Furthermore, it seems that a ban on virtual currencies is unlikely to take place, according to an unnamed senior government official.

In a report from MoneyControl, the official said that the Committee is looking at several options regarding the legality of bitcoin, but that it is continually watching the market.

“We may monitor these currencies for some time and then see how it progresses. It can then be concluded if at all there is a need for a regulator.”

However, the official added that the chances of legalising the digital currency is ‘very bleak,’ but that banning them wouldn’t be an easy task. Namely because knowing who is using the currency or operating it, is not known.

Bitcoin Grows in India

Even though the currency isn’t regulated in India, its use among its citizens is rising.

According to the World Bank, there are two billion adults without access to traditional financial services, making it hard for them to access money.

Digital currencies, however, are proving a viable way of accessing money. Not only that, but India, which is reported to have the world’s fastest-growing smartphone market, is predicted to have 1.4 billion phone subscriptions by 2021.

With a smartphone costing as low as $25 to $30 it’s easy to see why the affordable smartphone arena is growing in India.

Connecting bitcoin and smartphones seems to be a win-win situation for both areas. With a younger generation constantly glued to their phones and more in tune to technological progress, it seems this could help to boost their growth. Not only that, but it’s reported that there is an increasing demand for digital currencies among the 18-35 age range.

Keeping Tabs on Companies

However, even though bitcoin is gaining in popularity among India’s citizens, the Indian government is still maintaining a close eye on companies that deal with the cryptocurrency.

With a currency that is not regulated nor is it banned in the country, officials want to make sure that the public are not being taken advantage of.

Of course, when a national currency crisis takes place, which is what happened last November when India’s government wiped out around 86 percent of the national currency overnight, it’s understandable that people will turn their attention to other assets to get by on. In a bid to crackdown on black money, the country’s Rs 500 and Rs 1,000 bank notes were removed from circulation. As such, bitcoin became the currency of choice presenting many with an alternative option to cash.

A Favourable Outcome?

It seems that so far India is more in favour of digital currencies and is likely to continue supporting them in the long run.

Not only that, but since the country’s demonetisation steps have already been put into place to help push a digital agenda. At the moment, cash represents around 78 percent of transactions in India, but it’s thought that this number will reduce to 50 percent by 2020.

While a lot can still happen between now and then, pushing the digital agenda will help to change how people pay for things and the way they do so.

Featured image from Flickr via Maciej Dakowicz.