Preliminary trials of Peso-backed stablecoin initiated in the Philippines sandbox

The central bank of the Philippines will commence controlled trials of a national stablecoin that is pegged 1:1 to the local peso. Bangko Sentral ng Pilipinas (BSP) has approved a pilot program for PHPC, a stablecoin backed by the Philippine peso, in partnership with crypto wallet provider Coins.ph. The approval was granted under BSP’s Regulatory Sandbox Framework. As part of the agreement, Coins.ph will hold cash reserves in pesos that are equivalent to the circulating supply of the PHPC stablecoin within the sandbox environment. The purpose of pegging the stablecoin to the local currency is to facilitate the smooth transition of PHPC back to its physical fiat counterpart, as stated in the announcement. Wei Zhou, the CEO of Coins.ph, stated in an interview with Cointelegraph that the company expects to meet BSP’s key user and usage metrics within two to three months. The sandbox testing is aimed at assessing the real-world performance of the PHPC stablecoin and its impact on the local fiat ecosystem. The results will determine whether PHPC can transition from the sandbox environment to real-world usage. However, a formal public deployment will be subject to final evaluations and approvals by the central bank. Zhou further explained that local regulations indicate that the testing period can range from three to 12 months, depending on the complexity of the project. It is important to note that no official deadline was given when announcing the stablecoin experiment. Stablecoins backed by the Philippine peso were first introduced in July 2019, led by UnionBank, a local commercial bank. UnionBank launched a payments-focused stablecoin, PHX, which is pegged to the Philippine peso, with the aim of promoting greater financial inclusion. This initiative supports BSP’s efforts to promote digital financial inclusion for individuals and communities in the country. According to a report from PhilStar Global, PHX is being implemented on UnionBank’s i2i platform, which stands for island-to-island, institution-to-institution, and individual-to-individual. Similar to PHPC, PHX can be easily redeemed for pesos, which are then credited back to the users’ UnionBank accounts.