Update 14 May, 9.30 UTC: Added quotes from Coins.ph CEO, Wei Zhou.
The Philippines central bank will begin controlled trials of a national stablecoin pegged 1:1 to the local peso.
Bangko Sentral ng Pilipinas (BSP) approved a pilot for PHPC, a Philippine peso-backed stablecoin, in partnership with crypto wallet provider Coins.ph. The grant was approved under BSP’s Regulatory Sandbox Framework.
As part of the deal, Coins.ph will maintain cash reserves in pesos equivalent to the circulating supply of the PHPC stablecoin within the sandbox environment. The pegging of local currency aims to ease the transition of PHPC back to its physical fiat twin, the announcement said.
Speaking to Cointelegraph, Coins.ph CEO, Wei Zhou said that the company expect to target BSP's key user and usage metrics within two to three months.
The sandbox testing is geared toward testing the real-world performance of the PHPC stablecoin and its impact on the local fiat ecosystem.
“PHPC’s potential uses include domestic and cross-border payments, trading with other virtual assets, hedging against market volatility, and providing collateral and liquidity in DeFi applications.”
The results will determine PHPC’s leap from a sandbox environment to real-world usage. However, a formal public deployment will be subject to final evaluations and approvals by the central bank. Further explaining the initiative, Zhou said:
"Our goal is to ensure PHPC enhances digital asset trading and improves remittances —a sector where the Philippines is the world's fourth largest in inflows. With the global launch of Coins this week, we're also bullish about the synergies PHPC will create between Coins.ph and Coins' international operations.”
Local regulations suggest that the testing duration can range from three to 12 months from the pilot go-live date, depending on the project’s complexity. It is important to note that no official deadline was revealed when announcing the stablecoin experiment.
Check out Cointelegraph’s guide to learn more about using stablecoins for everyday transactions.
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Stablecoins backed by the Philippine peso first debuted in July 2019, led by Unionbank, a local commercial bank.
UnionBank launched a payments-focused stablecoin pegged to the Philippine peso, PHX, to drive greater financial inclusion. The initiative was launched to support BSP’s drive to advocate digital financial inclusion for people and communities in the country.
A related report from PhilStar Global revealed that PHX was being implemented on UnionBank’s i2i platform. The term i2i is an acronym for island-to-island, institution-to-institution and individual-to-individual.
Like PHPC, PHX is also frictionlessly redeemable for pesos, which are then credited back to the users’ UnionBank accounts.
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