Cryptocurrency will unlikely become the legal tender in the Philippines, according to the EIU.
EIU — The UK-based think tank said that cryptocurrency will unlikely become the legal tender in the Philippines in the long run.
The Economist Intelligence Unit said in its latest analysis that the Philippines displayed the most benign attitude toward cryptocurrency. However, it said that the government was expected to eventually curb crypto deals over the next 5 years as more awareness of its risks was shown.
According to the EIU, the Philippines wasn’t expected to accord a legal tender status on cryptocurrencies even if the country may support policies on its use moving forward.
“In the medium term, we expect authorities to promote cryptocurrency use cases with supportive policies through government initiatives,” the EIU said. “That said, we do not expect cryptocurrency to become the prevailing method of payment in the Philippines in the long run, as it is unlikely to be accorded legal tender status.”
The EIU also maintained that the influence of cryptocurrency in the Philippines was clearly visible as play-to-earn games such as Axie Infinity became popular during the pandemic.
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The EIU noted that the Philippines’ Bangko Sentral ng Pilipinas (BSP) still relied on investor education to warn the public about the risks attached to play-to-earn gaming.
Nonetheless, the EIU said the central bank had been expanding its regulatory coverage to encompass more virtual asset service providers (VASPs), thus, laying down better regulatory clarity than many other economies without dedicated regulations on cryptocurrency.
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Still, the EIU warned that poorly regulated crypto markets posed risks to the financial system in developing markets such as the Philippines as cryptocurrency dealers and exchanges, usually established on vague legal grounds, lacked statutory reserve balances, among other considerations.
“Patchy technological readiness in developing countries, such as poor connectivity in rural areas, might also mean a higher chance of investors falling victim to cybercrime. The rising adoption of cryptocurrency in countries such as the Philippines is creating such risks,” the EIU said.
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