FILIPINOS deserve better and easier access to financial products and services. This market need has fueled the growth of the Financial Technology (commonly known as ‘FinTech’) industry in the country. By turning to technology, private companies hopes to give better financial alternatives to Filipinos – especially those in the rural areas – who usually face barriers before they can access basic financial products and services such as opening a deposit account, sending remittances, and securing loans. With FinTech, these products and services should just be within the grasp of anyone with a mobile phone – a common item for any Filipino.
Our government regulators are also pushing for this agenda. The Bangko Sentral ng Pilipinas (BSP) promotes this growth chiefly due to its mission to spread financial inclusion. Among the BSP’s many responsibilities is to screen private entities hoping to deliver these financial products and services to the public. An example of this is the Electronic Money Issuer (EMI) provider which allows anyone to convert Peso to digital money and then use it to pay for goods and services online (i.e., to make it more convenient to pay utility bills) or to send remittances to anyone at the push of a button.
Meanwhile, the Securities and Exchange Commission (SEC) has been more experimental on this front by proposing to regulate what we call ‘digital assets’. Digital assets are any assets which digitally represents anything of value. These can be representations of money (legal tender), properties, or access to a particular online platform or service. A common example is bitcoin – a digital asset which, in and of itself, represents a store of value. By having bitcoin, any person can use it as a substitute to money to pay for goods and services before any merchant which accepts them. Digital assets such as bitcoin are particularly useful for remittances since transferring them does not need a bank or any third party intermediary (i.e., remittance agent) and because it can be done instantaneously online. This is in stark contrast to normal remittance transactions which involves a hefty processing fee and a long processing time. In regulating digital assets, the SEC currently has two draft rules lined up – the proposed Digital Asset Offering Rules and the proposed Digital Asset Exchange Rules. Without going into too much detail, these rules, once final will allow digital assets which are classified as securities to be available here in the Philippines and to be traded in an online marketplace.
On the flipside, government regulators are also aware of the risks associated with emerging FinTech products and services. In fact, the primary focus of regulators is to ensure consumer protection such that Filipinos’ hard earned money are kept safe and, additionally, to prevent these digital services from being used for purposes of money laundering. So far, both the BSP and the SEC have been very active on this front. As these activities become more regulated by the government, we are bound to see the rise of the FinTech industry and enjoy digital solutions that can make access to financial services a basic right for every Filipino.
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ATTY. MARK S. GORRICETA is the Managing Partner and head of the Corporate Group of Gorriceta Africa Cauton & Saavedra (www.gorricetalaw.com). He is well recognized as a legal expert in capital markets and securities law. He is also a pioneering expert in the Philippines on the law on blockchain, virtual currencies, fintech, e-commerce, data privacy, and artificial intelligence. He acts as legal counsel to leading tech and on-line companies in the Philippines.
This is a huge project..