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.
“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.
“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.
“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.