Remittance Channel of Choice?
A growing number of the 10M Filipinos overseas are starting to discover the benefit of remitting money back to the Philippines via cryptocurrency like Bitcoin. According to the Bangko Sentral, they estimate that over P300M monthly of the remittances to the Philippines are coming through this channel. That’s approximately three times the volume seen last year.
Why is it gaining traction? It’s arguably a cheaper and faster way to move cash. If you try the typical services like Western Union, an overseas Filipino will have to pay a transaction fee of $11. If they want to transfer via bank through Western Union the fees are lower but they will have to wait for 6 business days before it gets credited to the account of their family back home. This is a strong use case scenario for cryptocurrency here in the Philippines.
“It’s like any other monetary instrument [and even] an investment instrument. There are risks but essentially, it can be managed. If you want something that is fast, near real-time and convenient then there’s the benefit of using virtual currencies like bitcoin.” – BSP Governor Nestor Espenilla
BSP and SEC Looking into Regulating ICOs
This growth in remittance volume and the seemingly growing popularity of “Initial Coin Offering” or ICO of companies to raise funds has gotten the attention of the Bangko Sentral and the Securities and Exchange Commission (strangely not the POEA, DFA, or OWWA).
“Companies are seeking to facilitate ICOs and act as a central counterparty for trade in the related tokens to take advantage of the “strong growth potential in this space.” – BSP Governor Nestor Espenilla
The two organizations are now discussing how they can regulate ICOs in the Philippines. This is definitely a welcome move, especially if done in consultation with the local players of the industry. A cryptocurrency-friendly regulation can formalize and institutionalize ICOs which will only drive adoption and usage of Bitcoin in the country. This actually started already in February when the BSP asked local businesses using cryptocurrencies to register as a remittance or money changer company.
It will be interesting to see how this all plays out next year, especially here in the Philippines where we have an open-minded and progressive BSP Governor.
Disclosure: There are already several local companies raising funds through ICOs, one of which I’m supporting with is Salarium.