Is the BSP Anti-Innovation?
PLDT has just acquired the sixth digital bank license from the Bangko Sentral, joining Unionbank and the Gokongwei group in this new arena of branch-less banking. Having just recovered from a PLDT internet outage that lasted TWO WHOLE DAYS here in La Union, I feel very confident that any deposits that I make in the future PLDT digital bank will be secure, reliable, and always available. Also, their automated customer support system, which hangs up on you after giving you a service update instead of asking you if you need more help, is just top-notch, world-class stuff.
Dubbed “Maya Bank,” PLDT paid 1 BILLION pesos for the privilege of providing digital banking services to the Filipino people. In case my sarcasm is too subtle, I think that entrusting your money to these dweebs would be a mistake. It’s possible that I’m overthinking this, but I also find it odd that the BSP is going to stop granting digital bank licenses after the seventh license has been issued. Are they trying to limit the competition to just these players and/or protect the traditional banking industry? The goal should be to remove the need for bank branches completely. Why wouldn’t you keep encouraging as many of these digital banks as possible?
Speaking of the BSP, back in January, they issued a circular detailing some additional requirements for all cryptocurrency exchanges, wallets, and service platforms (called VASPs or Virtual Asset Service Providers). One of the most substantial changes was that users now have to report where their crypto deposits come from, including the name of the exchange. CoinsPH has apparently already implemented this, and any new crypto deposits are triggering a new process on the app. (Thanks for the tip, Rhenzo!)
So basically CoinsPH (and I imagine other VASPs soon) will hold your crypto until you report its origins, and that’s for any amount ABOVE 50,000 pesos in total value. The good news is that you can, of course, just keep saying that the funds are from your own balance in another regulated exchange, because there’s no way they’re going to apply chainalysis on their customers’ individual deposits to verify that. (Although technically possible, it’d add costs to the deposit process that would drive customers away.) It’s just an annoyance and an inconvenience, but it doesn’t bode well for the industry. There are other parts of that circular that are FAR more troubling.
So VASPs can only deal with other VASPs. You know who isn’t a VASP? Binance. Abra. Uniswap. Pancakeswap. Every DEX, and every DeFi project. Metamask. Hell, even the Bitcoin Lightning Network is no longer eligible. Check out this bit about an “unbroken chain of regulated entities.” Taken literally, this is anti-innovation, pure and simple.
These requirements from the BSP echo what we’re seeing in the US as well, with a new reporting requirement currently making its way through the Senate that requires Americans to not only indicate who their crypto is from, but include information such social security numbers. Thankfully, the Philippines is so bad at assigning SSS numbers and IDs to its citizens that they couldn’t realistically make that a requirement here. Ultimately the effect is going to be exactly the opposite of what the regulators are hoping to achieve. More people will go underground, and more technologists will work to build anonymizing tools to protect user privacy. The DEXs were the first stage of this privacy arms race, and I think in the next wave we’re going to see attempts at decentralized fiat on- and off-ramps as well. Given how these governments are curtailing our individual freedoms, it’s an inevitable response.
What’s going on with the markets this week? Everything is red, owing to the ongoing story about Evergrande and its impending collapse. If you aren’t familiar, this CNN primer is less than 3 minutes long. The expectation from US analysts is that the Chinese government will eventually step in to save the company, because if it shuts down, its $300B in debt will send shockwaves throughout the global economy. Some Chinese experts are theorizing that the government will save the retail mainstream market first, and let the rich people fend for themselves. This is a stark contrast to the US approach, which generally is the opposite of that, based on how they managed the 2008 financial crisis. I was chatting with trading guru Celeste Rodriguez about all of this yesterday and she observed that the Philippine stock exchange saw a small dip, but didn’t appear to substantially impacted by these developments. (She also had some pretty memorable statements about her love/hate relationship with the PSE, but we’ll save those for another time!)
Today’s featured artist from the Cryptopop Art Guild is Mac Alcala. Mac is 21 and lives in Taguig, one of our few artists who’s actually from Metro Manila. His stained-glass art style is pretty exquisite and when I first saw his samples, I knew we had to get him into the guild ASAP. On Friday I’ll be updating everyone on our guild fundraising efforts and our next steps. Please follow us on Twitter @cryptopopart! We’ll be regularly posting great art from our members.
That’s it for today, cryptofam!