This Tech Firm Plans to Launch a Philippine Stablecoin
This partnership with Hong Kong-based company Xtreme Business Enterprises marks the country’s second local stablecoin. Here’s what it means for the cryptocurrency industry.
So far, the Philippines has only one existing stablecoin. This coin, called PHX, was launched by UnionBank way back in 2019 to provide people in rural areas with easier remittances. This will change, as another Philippine stablecoin is currently in the works.
In a recently held media conference at the Manila Hotel, Smart Citi Teknologi (SCT) and Hong Kong-based Xtreme Business Enterprises (XBE) officially teamed up to enhance digitalization in the country with the help of blockchain technology.
Together, the two of them intend to launch blockchain-enabled projects that will provide convenience to Filipino users. Among these is a Philippine stablecoin whose name is yet to be released.
What are Stablecoins?
Cryptocurrencies are one of the hottest digital assets nowadays and stablecoins are among the many categories that fall under its niche. Technically speaking, “stablecoins are cryptocurrencies that attempt to peg their market value to some external reference.” Therefore, these assets are spared from volatility risks since their prices are stable, as the name suggests.
Unlike regular crypto assets, the values of these stablecoins are pegged to a certain fixed asset—like the US Dollar. This means that each stablecoin shares a 1:1 value with the USD. But in the case of this new stablecoin, its values will be measured up against the Philippine peso.
Through the use of stablecoins, Filipino investors can still manage to enjoy the perks of staking crypto assets, worry-free. By investing in one, they can make the most out of blockchain technology’s characteristics of speed, efficiency, and affordability.
Why Create a Stablecoin?
During the event, XBE CEO Julian So said, “I think the stablecoin is probably one of the most important projects, as it is going to change and transform the way financial transactions are being done in the Philippines.”
“What we normally do when we look at stablecoins is that we ensure that the coins are being backed by solid assets which can maintain the value of the stablecoin itself and this could be in the form of government debts or in the form of cash deposits in very reputable banks,” he added.
According to the CEO, the collapse of other crypto assets is mainly caused by the fact that they are backed by other virtual assets—which are not stable in nature. This may be in reference to how other assets like Bitcoin and Ethereum are prone to fluctuate from time to time, depending on several market factors.
Moreover, news about cryptocurrency and its investors tends to influence its price, as good news can raise its price, while bad news sends it down.
OFW Remittances Made Easier
The XBE CEO also called for a massive information campaign in the country so that more Filipinos will be more aware and confident when it comes to embracing blockchain technology. After all, he believes that this will be a great opportunity to help overseas Filipino workers (OFWs). How? For remittance purposes.
Aside from So, XBE Chief Risk Officer Joshua Chu further elaborates about the practicality of using stablecoins, as these can help OFWs save around 10 to 11% of their income that used to go to remittance fees. “The beauty behind these stablecoins is that you can simply transfer from end to end without going through the banking system”, he said.
“Imagine if you have peer-to-peer transactions enabled, where you’re no longer reliant on these mechanisms, you will automatically be bringing into the Philippines 10% of additional spending power and immediately that means more jobs and more stimulus,” he added.
Their Vision for the Project
By sharing in the collective vision for this innovative project, Smart Citi president and chief executive officer Mario P. Marcos said, “Within two weeks, we will be doing the launch. We can do a massive information drive to spread the information that we will be finally having the Philippine stablecoin. And I believe in a short time, this will be a center of exchange in the Philippines.”
Aside from the stablecoin, Smart Citi Teknologi and Xtreme Business Enterprises will also be working on a blockchain-enabled membership program for sustainable tourism and the promotion of world investments in Philippine arts and heritage.
Should this project be a massive success, this will be a great help of Filipinos in terms of remittances and other transactions. Since this works as a great way to make people see the potential of staking crypto, the industry may see more investors that will increase the crypto adoption rate in the country, which currently stands at 15%.