Cryptocurrency has been under the spotlight ever since Bitcoin made headlines for having the biggest value surge in the history of the digital asset. It has gradually dropped in value since then and lost over half from late 2017. But despite this decline, experts are still optimistic it will blow up again any time now.
Since Bitcoin’s decentralization, over 1,800 more cryptocurrencies have been created. It is generally considered as a worldwide phenomenon, with the Philippines garnering more interest and acceptance of the cryptocurrency than any other country due to a number of factors.
There is a High Level of Interest and Acceptance in the Philippines
Social media has played a huge role in marketing cryptocurrency among Filipinos by being the main channel for disseminating information about blockchain and anything related to the digital asset. This has introduced the technology associated to cryptocurrency relatively early for Filipinos including the opportunities related to it, making cryptocurrency not so obscure as some might think.
The limited amount of investment opportunities also helped push cryptocurrency to become a hit in the Philippines, particularly those who are not served by a bank or any financial institution. The technology became appealing to them since they could forego traditional financial channels and allow them to invest in cryptocurrency to earn money based on price fluctuations.
Without strict regulations in purchasing cryptocurrency, Filipinos have been more than eager to jump into the trend—thanks to the local pioneers in the blockchain industry who, with great care and thoroughness, cooperated with regulatory agencies to allow them a certain amount of freedom to test the local market. This has set favorable conditions that gave cryptocurrency the opportunity to flourish.
A Great Investment Opportunity for Filipinos
Statistics show that the Philippines is only second to Indonesia in the adoption of virtual currency among five developing ASEAN nations. This means the country has been relatively more open to using cryptocurrency than its Southeast Asian neighbors.
According to a Financial Times report, Indonesia garnered a 3.3 percent adoption rate, followed by the Philippines at 2.9 percent, which are higher than Malaysia, Thailand, and Vietnam. This high rating is mainly due to the Bangko Sentral ng Pilipinas’ decision to regulate cryptocurrencies in the country rather than ban it.
Just recently, ten blockchain and virtual currency companies were allowed to operate in an economic zone so that they could take advantage of the tax cuts while creating jobs for locals. These companies would be the first to set up shop in the Philippines after legalizing their entry into an economic zone. This move has set the country apart from its neighbors that have not allowed such entities to operate. These developments have made cryptocurrency an attractive option for Filipinos to start investing in.
Stricter Regulations and the Implementation of Cryptocurrency
While the Philippines is enjoying friendlier regulations on the virtual currency, some parts of the world are not too keen on following suit.
After the recent heist of roughly ¥58 billion worth of cryptocurrency from a Tokyo-based company, the biggest of its kind, there have been calls for tighter regulations and security requirements to protect investors.
While this is good for investors, striking the right balance should be done so that excessively strict regulations won’t hamper the potential of cryptocurrencies to make financial services more convenient.
Cryptocurrency, unlike legal tender, is not regulated by any government body or central bank. Each transaction is managed and recorded using a decentralized system through blockchain technology. It was created as a tool to make quick and easy web-based payments including money transfers and other financial transactions over the internet.
Apart from all these supposed conveniences, virtual currency boasts of extremely low-interest rates, giving it the potential to produce considerable gains. This is actually the main reason it has garnered a lot of attention from investors.
Despite these advantages, there has been a growing concern form the wild fluctuations in cryptocurrency prices. Compared to a company’s earnings and overall performance where stock prices can be based, the value of cryptocurrency is not backed by specific assets. And since there are no established metrics to predict its future value, prices fluctuate dramatically.
These wild fluctuations have prompted calls for stricter regulations in many countries in the hopes of establishing financial stability. Moreover, there has been a growing concern where virtual currency is used in money laundering and funding terrorist activities, particularly in Europe.
Just last year, Japan has made a move to make cryptocurrency as a legal means of financial settlements, prompting investors to register all tradings with the government. The country has now joined the Philippines in turning into a big player in the field of trading virtual currencies.
Protecting Filipino Investors from the Risk of Fraud
Now that the Philippines has recognized the growing potential of cryptocurrency as a global medium of exchange, the Bangko Sentral ng Pilipinas is creating rules to regulate transactions involving this virtual currency while protecting investors and reducing the risk of fraud.
Since the increasing popularity of initial coin offerings (ICO) in the country, the BSP has found a reason to act to avoid scammers from taking advantage of this new industry. It has been reported that there are many cases where ICO promoters simply disappear after getting their hands on their investors’ money.
The regulation set to control these ICOs will include clear guidelines on the cybersecurity across cryptocurrency markets, the eligibility of issuers and the financial literacy of investors.
While no approval of public sale has been set just yet, and investigations of unlicensed sellers are still ongoing, this regulatory sandbox approach will certainly be of huge benefit to investors who will receive a considerable amount of protection to avoid scams or thefts of any kind.
With the direction that the country is going in terms of cryptocurrency being used as a medium of exchange and making financial investments, things are certainly looking up. When it comes to investments of any kind, it is always a smart move to start early.
So if you are looking for a place to invest in a cryptocurrency market where rules and regulations are set by a governing body to protect investors, the Philippines is one of the most attractive countries to start a business or grow your money and make a potentially huge return with less risk involved.
References:
https://www.reuters.com/article/uk-crypto-currencies-philippines/philippines-to-allow-cryptocurrency-operators-in-economic-zone-idUSKBN1HW1KY
https://www.reuters.com/article/us-philippines-cryptocurrency/philippines-to-develop-rules-on-cryptocurrency-trading-idUSKBN1FI0NK
https://www.entrepreneur.com.ph/news-and-events/guess-how-many-in-the-philippines-are-using-bitcoin-and-other-cryptocurrencies-a00200-20171208
https://www.japantimes.co.jp/opinion/2018/01/30/editorials/tightening-cryptocurrency-regulations/#.Wv60oqSFO00
Rocky Chan is a lawyer and business consultant who excels in corporate formation, immigration procedures, and client relations. In the last 7 years, he honed his craft in the field of foreign investment consultancy.
