Four Filipino banks, UnionBank of the Philippines, Rizal Commercial Banking, Cantilan Bank, and the Rural Bank of Guinobatan, announced they plan to launch a multi-bank peso stablecoin, PHPX, later this year. The coin will initially run on the Hedera DLT network.
JUST Finance will initiate the project, but the banks will still have a significant role in governing the stablecoin, according to reports. The banks aim to boost cross-border payments with the stablecoin and also exchange stablecoins in different currencies.
Filipino banks plan to launch PHPX stablecoin on Hedera DTL
Later this year, several Filipino banks plan to launch the PHPX stablecoin for cross border remittances & more
On @hedera DLT@UBXph @d_inderias
A deep dive:
— Ledger Insights (@LedgerInsights) January 9, 2025
UBX, UnionBank’s subsidiary, has been in the blockchain space managing a quasi-cryptocurrency in a closed-loop system. In 2018, UBX set up a token-based automated clearing house (ACH) to enable payments for rural and community banks that were not members of the national retail payment system (NRPS) to funnel through UnionBank. UBX’s ACH system leveraged a permissioned version of Ethereum, Phoenix token (PHX).
David Inderias, CEO of JUST Finance, said that the stablecoin might face the challenge of compliance with Basel Committee crypto asset rules. He revealed that if a bank stablecoin is classified with other cryptocurrencies (Group 2), it could get expensive for the banks to hold them. Inderias also added that the latest Basel iteration required the DLT network to be permissioned to qualify a stablecoin as a Group 1b (low-risk) stablecoin. The CEO said that it was the reason for choosing the Hedera DLT as the initial network for the stablecoin.
The Bangko Sentral ng Pilipinas (BSP) also requires any coin in the banks to comply with the EU’s MiCA regulations or regional equivalents.
UBX’s CEO, John Januszczak, mentioned that the financial technology company was ready to take the next step.
“We need to create something that is publicly exchangeable, so that we can support use cases outside of our own closed loop ecosystem.”
-John Januszczak, CEO of UBX.
Januszczak said he was open to the concept of PHPX when David Inderias and Mikko Perez from JUST Finance brought up the idea to UBX since he was looking forward to supporting stablecoins beyond the Phoenix token created by UBX.
On top of being used for cross-border payments, the banks also plan to leverage PHPX for remittances.
Filipino banks want to use PHPX for remittance services
Remittances from Filipinos working abroad are a crucial source of funds in the Philippines. The World Bank revealed that the Philippines is the fourth largest recipient of remittances from citizens living abroad, which totaled $40 billion last year, representing ~10% of the nation’s GDP.
Januszczak noted that Filipinos abroad have limited control of their funds after sending the money to the Philippines. He hopes to change that by offering remittance services through the stablecoin PHPX.
The CEO also highlighted that the banks involved will need to abstract the stablecoins in the backend. After that, the stablecoins can be deposited into a bank account, a GCash wallet, or cash pickup at an over-the-counter location. Januszczak said it will enable banks to provide seamless on- and off-ramping.
JUST Finance also plans to hold most of the PHPX token reserves in segregated bank trust accounts, holding government bonds with a small cash balance for short-term settlement. As a multi-issuer token, once a bank goes under, the stablecoin will go bankrupt remotely, except in the case of disappearance caused by fraud. Inderias revealed that since JUST Finance does not hold cash, the PHPX tokens should also be safe if the bank experiences any troubles.
Part of the Filipino banks’ plan is also to set up a multi-currency stablecoin exchange during launch that will be regulatory compliant to enable cross-border payments. Cross-border payments will require liquidity providers who can earn a yield since they will involve swaps of foreign currency stablecoins with PHPX.
Inderias said he anticipates larger cross-border payments for trade and the potential domestic use of the stablecoin at point of sale (POS). The CEO also maintained that the stablecoin’s goal will not be purely for remittances, and before that can even be considered, bank applications will have to go live first.
