The Bangko Sentral ng Pilipinas and the Philippine Digital Asset Exchange are supporting the creation of a crypto-and-fintech sandbox to spur innovation and technological advancements in digital assets and financial services.
“In a regulatory framework, a startup or an entity can test an idea rolling out a product to the market but within the parameters prescribed by a regulator. This framework or sandbox environment ensures that innovative initiatives flourish while ensuring consumer protection, data privacy, and cybersecurity and that all such technology readily complies with applicable laws and regulations. The private sector and regulator can create an ecosystem for these initiatives,” said Nichel Gaba, founder and CEO of PDAX, one of the country’s largest and pioneering cryptocurrency exchanges.
Central Bank Governor Benjamin Diokno said nascent financial technologies and the legal framework that supports these have to be cultivated to support the economy, which has remained resilient despite the pandemic and is expected to register a 6.5 to 7.5 percent full-year growth. The banking sector itself remains robust with industry assets expected to grow by 6.1 percent year on year.
“As a result of the pandemic, we have seen an increase in use of the fintech platforms. The crisis has rapidly reshaped not just the financial system but also the way we interact and how we do business.” Diokno added.
Gaba and Diokno participated in a recent online forum, “The Philippine Financial Sector: Policy Perspectives and Trends,” which was hosted by the European Chamber of Commerce in the Philippines (ECCP) and the Fintech Philippines Association (FPA).
Gaba welcomed the opportunity to collaborate with the BSP in developing and launching initiatives that can increase public participation in the fintech and digital asset spaces while protecting their welfare.
“The BSP is one of the global leaders in this space, and we are honored to work with them into nurturing fintech advancements that can help our public make worthy investments, build their income and savings, and plan for a secure future,” he said.
Amor Maclang, ECCP’s Innovations Committee chairperson and FPA executive director, added: “Despite the economic contraction, there is a newfound liquidity among consumers who are asking, ‘Where do I put my money so I can yield the best results?’ With the Philippines currently as the number three country that is experiencing heightened activities and greater membership enrollment in crypto platforms, the demand has outpaced the system.”
Gaba stressed the importance of the private sector’s cooperation with regulatory bodies especially as more and more digital services emerge and are adopted by the public.
“Our regulators have proactively fostered innovation. It's often taken for granted how serious it is to service customers in the financial services industry. Capital requirements must always be high. The consumer protection standards must always be upheld. It's incumbent on organizations like PDAX to step up to these requirements, whether in the form of sandbox or actual regulations,” he said.
