Key Takeaways
- With a $35 billion annual remittance market, the Philippines is one of the most compelling stablecoin adoption opportunities in the world.
- Transactions between businesses (B2B) already utilize stablecoins. It is only a matter of making the experience seamless for retail users.
- The regulatory environment in the Philippines surrounding virtual assets (BSP, VASP licensing, FATF alignment, etc.) is a competitive advantage rather than a compliance crutch.
- There are five infrastructure elements that need to work together for stablecoin: issuance, on/off ramps, developer tooling, settlement, and compliance.
- The long-term goal is stablecoins as infrastructure that works without users knowing about it, as if it were invisible.
In Southeast Asia, the Philippines is fast becoming one of the region’s most important stablecoin markets. One of the main reasons for this is the inflow of remittances which ranks fourth in the world despite the country being only the 14th most populous globally. In terms of remittances, the Philippines ranks only behind India, China, and Mexico.
Take this together with the surge in the use of digital wallets as a consequence of the COVID-19 pandemic. The acceleration of the adoption of e-wallets has also increased the exposure of Filipinos to cryptocurrency wallets, especially since there are electronic money issuers (EMIs) such as Gcash and Maya that are also virtual asset service providers (VASP), with such companies standing at the intersection of banking, payments, and cryptocurrency.
In terms of the regulatory environment of the Philippines, the Bangko Sentral ng Pilipinas (BASP) and its virtual asset services provider (VASP) licensing framework have placed a good foundation for cryptocurrency in the country. But on top of that, they have also been forward-looking in terms of advocating for the regulated use of virtual assets in the Philippines.
Strong Foundation, But Plumbing Missing
The core problem in the Philippines in terms of the widespread adoption of stablecoin can be seen as a “plumbing” issue. The problem is plumbing because in terms of the infrastructure, the connection between the sender and receiver across borders is not apparent. Stablecoin already flows through business-to-business (B2B) corridors, but most retail users are not aware of it; in many cases, they cannot easily access it.
The four main pain points encountered by Filipinos for money transfers involve speed (transfer delays), cost (foreign exchange and transaction fees), and capital efficiency (money that is stagnant and stuck in legacy systems loses its value while it is stale). A fourth pain point, which is especially relevant for cryptocurrency at the retail level, is wallet address complexity. For example, if someone sends USDC to another person, he needs to know which chain he is on (Ethereum, Tron, etc.). It is a barrier that the industry has not fully solved at scale.
Five Infrastructure Layers
There are five layers that need to exist at the infrastructure level for stablecoin settlement to work at scale.
- Stablecoin issuance: Regulated issuers (USDC, USDT) that maintain a credible peg to the U.S. dollar
- On/Off ramps: The bridges that connect fiat currency users to on-chain activity
- Developer layer: APIs, SDKs, and tooling that allow builders to create applications on top of the existing infrastructure
- Settlement: The on-chain layer where transactions are actually settled (where Morph sits)
- Compliance: KYC, AML, and reporting infrastructure that government agencies and institutions require to regulate the system
Discoverability is also a problem that runs through all the five layers mentioned above. The routing of stablecoins through a compliant counterparty in another country can also be a source of difficulty. That is what initiatives like the payment network of Circle are beginning to solve.
The Goal in Three Years: Invisibility
Once the infrastructure is built in the Philippines for stablecoin, the technology should be so efficient and in-built that it is invisible. The goal is for the technology to be seamless in the daily life of Filipinos. Users need only feel the benefits of stablecoin in terms of savings, speed, and convenience. Exactly how GPS is today.
The One Move That Could Change Everything
Above all else, the government must have clarity in terms of how it regulates cryptocurrency. Ambiguity deters builders, scares capital, and ultimately deters the investments in infrastructure that would benefit users the most.
Government agencies need to harmonize regulation across different regulators in the Philippines, just in the same way as the U.S. is beginning to align the SEC and CFTC on cryptocurrency jurisdiction.
Easily missed, another gap that can be closed is low-value transaction thresholds for stablecoins, which needs to be modeled on contactless payment limits. By making small stablecoin transactions frictionless, mass-market adoption would be unlocked more rapidly in a way that large B2B corridors alone cannot.
DOPAY Digital Wallets and Crypto Wallets
DOPAY is a relatively new app. DOPAY, through its parent company WIBS PHP INC., is regulated by the Bangko Sentral ng Pilipinas (BSP) and has licenses as an Electronic Money Issuer (EMI) and as a Virtual Asset Service Provider (VASP).
Powered by blockchain technology, DOPAY provides payment, remittance, and financial accessibility through electronic money issuance with its E-Wallet and cryptocurrency exchange with its Crypto Wallet. USDC and USDT are among the stablecoins that can be traded through the DOPAY Crypto Wallet.
DOPAY is an easy-to-use and convenient app that safeguards your information and your money through the policies and procedures required by the BSP.
Through DOPAY, OFWs no longer need to face excessive hidden remittance fees and transfer delays. Through the global features of DOPAY wallets, families of OFWs can receive their needed funds when they need it and in the amount they need it.
Though DOPAY has not yet launched a version of the app that allows point-of-sale payments to merchants using crypto, DOPAY does make it easier for families of Overseas Filipino Workers (OFWs) to receive remittances in the form of cryptocurrency. Through the global account features of the DOPAY app, OFWs can send cryptocurrency to the crypto wallets of their families in the Philippines. This allows the families of OFWs to save money on fees and to experience more convenience in the remittance process.
Download the DOPAY app today!
