LOCAL tech company Smart Citi Teknologi and Hong Kong-based Xtreme Business Enterprises Ltd. (XBE) tied up to launch Philippine stablecoin.
“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,” said Julian So, chief executive officer of XBE in a media conference on Tuesday.
The Bangko Sentral ng Pilipinas defines stablecoins as privately issued cryptocurrencies that are designed to minimize the volatility of their value through some form of backing.
Mr. So recognized some stablecoins have collapsed in value from $1, which is what they are supposed to be, all the way down to zero.
“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 said.
Mr. So said the reason some stablecoins collapsed was because they were backed by other virtual assets.
“The moment the virtual currencies cease to have value, you’re going to have a de-pegging and that’s why you’re going to have a collapse of the stable currency,” he said.
The companies identified four advantages of the Philippine stablecoin project, namely: decentralized; stable and reliable; efficient; and borderless.
“The beauty behind these stablecoins is that you can simply transfer from end to end without going through the banking system,” XBE Chief Risk Officer Joshua Chu said.
Mr. Chu said ease of transfer is important to the country as many Filipinos working abroad tend to lose as much as 10-11% of their income via fees in remitting money to the Philippines.
“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 said.
Mario P. Marcos, president and chief executive officer of Smart Citi, said the company is planning to officially launch the project in two weeks.
“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,” he said. — Justine Irish D. Tabile