The Bangko Sentral ng Pilipinas approved the pilot version of the Philippine Peso-backed stablecoin PHPC.
It follows the BSP’s Regulatory Sandbox Framework, designed for developing and testing new financial technologies in a controlled environment.
READ: PH partners with UN to boost disaster response
The official website says the cryptocurrency directly pegs with the Philippine Peso, ensuring coin holders can redeem them for paper money.
What is the purpose of the PHPC stablecoin?
Wei Zhou, Coins.ph CEO, explained the features of the PHPC stablecoin in a Business Inquirer article:
“PHPC will empower Filipinos to transact seamlessly and securely in the digital economy while also providing a stable store of value as they participate in the rapidly evolving digital asset landscape,” says Wei Zhou, Coins.ph CEO.
He notes among the main customer bases are Overseas Filipino Workers. The stablecoin will allow them to send money home to their loved ones while saving on processing times and fees.
“While PHPC presents a variety of potential applications and trading payments, we anticipate remittances to be a foremost use case for Filipinos as PHPC will not only reduce costs. It also means that now, peso transactions can happen 24/7 and in real-time,” the executive added.
Coins.ph hopes to secure 20,000 to 30,000 customers within the PHPC stablecoin’s first month.
What is a stablecoin?
Coins.ph is the Philippines’ local cryptocurrency exchange. That is why some may assume the PHPC stablecoin works like Bitcoin or Ethereum.
As the name suggests, stablecoins tie their value to other assets, making them less volatile than erratic crypto assets.
As a result, they can hedge against market volatility, making them more popular during economic uncertainty.
That is also why Coins.ph designed PHPC for “trading with other assets and providing collateral and liquidity in DeFi applications.”
“DeFi” stands for “decentralized finance,” which pertains to financial products and services operating on blockchain networks. You may classify stablecoins into the following categories listed in an Inquirer USA article:
- Fiat-backed: The PHPC stablecoin falls into this category because it has the backing of a national currency.
- Commodity-backed: Gold, silver and other commodities support this stablecoin type’s value. Consequently, they make it easier to purchase these assets.
- Crypto-backed: As the name suggests, these stablecoins peg their value to Bitcoin, Dogecoin and other crypto coins. They maintain a low supply of their pegged currency to keep prices stable.
- Algo-based: These stablecoins rely on algorithms to remain steady, regardless of market conditions. Unfortunately, one of the most famous ones, Terra, ended with its creator going to jail for fraud.
This article does not provide financial advice. Please speak with a reputable financial adviser to explore your investment options.