Binance, the cryptocurrency exchange, has recently acquired a virtual asset service provider (VASP) license from the Bank of Spain in order to operate
Binance, the cryptocurrency exchange, has recently acquired a virtual asset service provider (VASP) license from the Bank of Spain in order to operate in the country. In its ambitious expansion plans that the cryptocurrency exchange is persisting despite the global jump and market slump in the cryptoverse, there is another country that Binance is looking toward — the Philippines.
In June, the CEO of Binance, Changpeng Zhao, stated in a press briefing in Manila that the exchange is looking to obtain a VASP license in the Philippines. In addition to the VASP, Binance wants to get an e-money issuer license from the central bank of the country, Bangko Sentral ng Pilipinas (BSP). While the former license would allow the platform to offer trading services for crypto assets and the conversion of these assets to the Philippines, the latter will allow it to issue electronic money.
The Philippines is the world’s 36th largest economy in the world by nominal GDP and the third-largest in Asia, according to data from the World Bank. Despite its small size, the country is considered to be one of the fastest-growing economies in the world due to it being newly industrialized, thus marking a distinctive shift from agriculture to services and manufacturing.
Cryptocurrencies are extremely popular in the Philippines due to the economic shift that the country went through when digital assets began to gain popularity. A recent survey has revealed that the Philippines ranks 10th in cryptocurrency adoption, with over 11.6 million Filipinos owning digital assets.
This is also evidenced in the fact that according to data from ActivePlayer.io, 40% of all the players of the popular play-to-earn (P2E) game Axie Infinity were from the Philippines. In fact, the game has also been a financial game-changer for many citizens in the country.
Related: How blockchain games create entire economies on top of their gameplay: Report
Cointelegraph spoke with Omar Moscosco, co-founder of AAG Ventures — a P2E guild based in the Philippines — about the potential the Philippines holds for the mass adoption of digital assets. He said, “The Philippines is home to a large unbanked and underbanked population with some 66 percent of this total population having no access to traditional banking services or similar financial organizations.”
He added that COVID-19 sparked a digital transformation in the country, saying:
“The Philippines registered the highest number of first-time users of digital payment methods at 37 percent. The regional average was 15 percent. As such, digital payments made up 20 percent of total financial transactions in the country in 2020, an increase from 14 percent in 2019. Also, in 2020, e-money transactions totaled 2.39 trillion PHP (US$46.5 million), an increase of 61 percent compared to 2019.”
Jin Gonzalez, chief architect of Oz Finance — a decentralized finance (DeFi) service provider based in the Philippines — told Cointelegraph about the impact the entry of Binance in the country would entail for the market. He said, “Binance already receives a large amount of Philippine peso volume for its peer-to-peer (PHP/USDT) service. It is also the exchange of choice for Filipinos due to the favorable rates it charges versus local service providers. Getting a BSP license will only legitimize its operation and strengthen its position in the market.”
However, global concerns have begun to emerge around the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) frameworks that companies with VASP licenses use. The central bank of Ireland has published a bulletin for VASPs that is aimed at assisting applicant firms to strengthen their VASP registration application and their AML/CFT frameworks accordingly.
This development was good for the growing ecosystem, as it addresses concerns that would inevitably arise when considering the integration of digital assets into the existing financial ecosystem and the economy. At the same time, Hong Kong introduced a licensing regime for VASPs in June this year, which imposes statutory AML/CTF requirements for companies that wish to operate in the nation.
Central government keen to push use cases
The regulatory landscape of the Philippines is still in a fairly nascent stage as there is no strict restrictive regulation for both businesses and individuals at the moment. In fact, the government of the country, in tandem with its central bank, seems keen to adopt blockchain technology and implement its use cases in various sectors of the economy. Gonzalez said:
“At the current moment, BSP regulation is in place, but SEC regulation has yet to pass. Regardless, the Philippines has an open position on digital assets, and its intent to regulate is intended to balance investor protection with promoting the advancement of the technology. PH regulators, especially the Central Bank, maintain a…
cointelegraph.com