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Union Bank of Philippines is considering to propound cryptocurrency trading and custodial services

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To take advantage of the rising demand and acceptance of digital tokens in the Asian nation, the Union Bank of the Philippines seeks to offer cryptocurrency trading and custodial services.

According to Cathy Casas, head of the bank’s blockchain and application programming interface group, an average investor of the Philippines will likely hold 3 percent to 5 percent of their assets in crypto assets like Bitcoin. This is around a belief that if markets remain “persistent,” closer or around 1 percent to 2 percent now in five years. She also adds to her conversation that many crypto investors are young individuals, with some earning tokens through play-to-earn virtual games.

UnionBank of the Philippines Picks Metaco and IBM for crypto custody operations

The Union Bank of the Philippines, Inc., or simply UnionBank, is one of the Philippines’ universal banks and the country’s tenth-largest bank by assets.

They have chosen METACO’s digital asset management services. METACO is the premier security-critical software and infrastructure provider to the digital asset ecosystem. UnionBank is implementing services on IBM Cloud to take advantage of IBM’s digital asset infrastructure’s confidential computing capabilities, wholly integrated with METACO’s digital asset orchestration system.

Union Bank will use METACO Harmonize, METACO’s digital asset orchestration solution, to manage its digital asset operations. Union Bank manages approximately $15 billion in assets. Union Bank can improve insurability with additional FIPS 140-2 Level 4 certified physical controls for managing and migrating keys, mitigate potential operational risk and loss events with trusted threshold signatures and hardened policies, and address insider collusions with third-party audited source code deployments, according to METACO’s announcement. IBM Cloud Hyper Protect Services enables these capabilities.

Current legalities revolving around crypto in the Philippines

According to a Freemanlaw article, the Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), has published instructions on virtual currencies. These guidelines state that virtual currencies are not legal money since they are not backed by a central bank or a specific commodity and are not guaranteed by any jurisdiction. However, because they are utilized as a gateway to deliver specialized financial services, such as remittances and payment transactions, organizations that use virtual currencies to provide such services must register with the BSP and implement appropriate risk mitigation and management procedures. In addition, the Guidelines impose fines for virtual currency organizations that operate without the BSP’s prior approval.

Unionbank is also one of the central bank-approved legal cryptocurrency exchanges. In 2019, the bank created PHX, its stablecoin, to make payments and remittances easier for rural banks in its network.
Although the central bank warned that cryptocurrencies could “pose a threat to the financial system,” citing their vulnerability to illegal activities such as money laundering and terrorist financing, developments, wider acceptance, and essential awareness can mitigate the risks to some extent.

Philippines’ BIR says NFT-based Axie Infinity players to pay tax on their earnings

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Philippines’ regulatory entity wants the players of the popular NFT-based online video game, Axie Infinity players to pay taxes on income generated from the game. In recent weeks, the platform has garnered significant traction but the’ finance undersecretary of the Philippines, Antonette C. Tionko said that the earnings from these gaming platforms are subject to income tax and players are required to report them for taxation.

According to the report by the Manila Bulletin, the country’s government has not yet determined whether Axie’s in-game NFTs be deemed as securities or currency. Despite admitting to the lack of clarity in terms of categorization by the Securities and Exchange Commission [SEC] as well as the Bangko Sentral ng Pilipinas [BSP], the official went on to state,

“But regardless of how it is characterized, it’s taxable, subject to income tax.”

The sporadic rise of NFT-based Axie Infinity in Philippines

According to the tracking platform, Player Counter, the Philippines happens to be the largest market for Axie Infinity, with more than 40% of its players located the country followed by Venezuela, United States, Thailand, and Brazil. Developed by Vietnam-based studio Sky Mavis, Axie Infinity saw enormous success riding the wave of NFT mania. Last week, the platform touched an all-time high in sales of $1 billion and established a new record, emerging as the highest valued NFT project in the world.

Besides, there are two tokens that can be earned through playing Axie Infinity- Smooth Love Potion [SLP] and Axie Infinity Shard [AXS]. While SLP works as in-game currency, AXS, on the other hand, is the governance token of the Axie community.

Tionko, who heads the DOF’s Revenue Operations Group argued that even though the platform is not based in Philipinnes, it is still generating income from players based within the country and with the rise in the broader cryptocurrency market, players’ earnings becomes comparable with local wages. She said,

“It is not registered in the Philippines. That is one of the things that we hopefully capture once we have that system of registration for non-residents. It’s not in the Philippines, but certainly, whoever earns currency from it, you should report it. Remember the principle of taxation, it’s a flow of wealth”

Philippines Is All Set To Tackle Money Laundering By Licensing Crypto Platforms

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The Philippines seems to be steering towards the world of crypto as its value has been skyrocketing. The country revealed that it was going to toughen its laws to hinder potential money laundering violations.

The crypto industry was rolled out as an entity that had nothing to do with the centralized systems or governments. However, the value, popularity, and increase in perpetrators in the industry caused the government to intervene. While governments across the globe have been stepping up their games and making regulations compliant with the crypto industry, the Philippines just jumped onto the bandwagon.

Philippines’ Central Bank To Take Things Into Its Hand

A local news portal revealed that the Southeast Asian country was looking to impose stricter rules with regard to the crypto wing of the region. Just like all the other countries across the globe have been working towards the licensing of crypto firms, the Philippines has now mandated its crypto platforms to register with the central bank of the country.

The central bank of the country, Bangko Sentral ng Pilipinas [BSP] recently pointed out that any platform that carried out services that include cryptocurrencies like Bitcoin in the country had to acquire a license. The Governor of BSP, Benjamin Diokno went on to point out how the country has worked towards stimulating the growth of digitalization. He said,

“We have seen accelerated growth in the use virtual currency exchanges in the past three years, and it is high time that we broaden the scope of existing regulations in recognition of the evolving nature of this financial innovation and set out commensurate risk management expectations.”

Crypto platforms operating in the Philippines would be able to continue transfer as well as “safekeeping” along with the administration of digital assets without any hassles. These platforms would further be mandated to live up to regulatory expectations that tackle money laundering and financing of terrorism.