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.