Philippines Launches Testing for Peso-Backed Stablecoin Sandbox

Last Updated on May 13, 2024

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Key Takeaways:

  • The Bangko Sentral ng Pilipinas (BSP) has launched a pilot for the PHPC stablecoin, collaborating with under its Regulatory Sandbox Framework, to explore the stablecoin’s real-world application potential.
  • PHPC is pegged 1:1 with the Philippine peso and is backed by equal cash reserves, ensuring stability and easy conversion for users within the sandbox environment.
  • The pilot will investigate the stablecoin’s uses in domestic and cross-border payments, digital asset trading, and its role in decentralized finance, with outcomes influencing potential broader deployment.

The Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), has initiated controlled trials of a national stablecoin, PHPC, which is pegged 1:1 to the local peso.

This pilot project, a collaboration with crypto wallet provider, has been sanctioned under the BSP’s Regulatory Sandbox Framework.

As a condition of the pilot, is required to maintain cash reserves in pesos equal to the circulating supply of the PHPC stablecoin within the sandbox, ensuring a smooth conversion process back to the physical peso.

The primary aim of the sandbox testing is to assess the PHPC stablecoin’s performance in real-world applications and its potential impact on the local fiat ecosystem.

The project explores a range of uses for the stablecoin, including domestic and cross-border payments, trading with other digital assets, market volatility hedging, and serving as collateral and liquidity in decentralized finance (DeFi) applications.

The outcome of this testing phase will help determine whether the PHPC can transition from the controlled sandbox setting to broader real-world implementation.

However, any decision to deploy the stablecoin publicly will depend on final evaluations and approvals by BSP.

The timeline for the testing could vary from three to twelve months from the launch date, depending on the complexity of the project.

Notably, no fixed deadline for the experiment’s conclusion has been announced.

The concept of a Philippine peso-backed stablecoin was first introduced in July 2019 by UnionBank, one of the country’s leading commercial banks.

Named PHX, this payments-focused stablecoin aimed to enhance financial inclusion, aligning with BSP’s initiative to promote digital financial solutions across the nation.

The PHX stablecoin operates on UnionBank’s i2i platform—short for island-to-island, institution-to-institution, and individual-to-individual—and like PHPC, it is seamlessly convertible back to pesos, credited directly to users’ UnionBank accounts.

This venture into stablecoins is part of the Philippines’ broader strategy to incorporate digital technology into financial services, thereby fostering economic inclusion and efficiency across its diverse archipelago.

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