Cryptocurrency Ownership in the Philippines

The Philippines has emerged as a global leader in cryptocurrency adoption, ranking second only to South Africa in terms of ownership. According to recent research, 52% of Filipinos own cryptocurrencies, such as Bitcoin and Ethereum. This represents a notable increase from 45% in the previous year, highlighting the growing popularity of digital assets among Filipinos.

This surge in cryptocurrency ownership can be attributed to several factors, including heightened awareness, the widespread use of play-to-earn games like Axie Infinity, and the growing perception of cryptocurrencies as a viable alternative to traditional financial systems.  

Cryptocurrency Ownership Statistics

The Philippines has a remarkably high percentage of cryptocurrency ownership, with 52% of Filipinos owning some form of digital currency. This places the country second globally, trailing only South Africa, which boasts a 65% ownership rate. In 2023, the Philippines held the fifth position globally, with 13.4% of the population, equivalent to roughly 16 million Filipinos, owning cryptocurrency.

Notably, the total market capitalization of cryptocurrencies in the Philippines more than doubled in 2023, surging from USD 829 billion to USD 1.72 trillion.  

Interestingly, men are 1.7 times more likely to own cryptocurrency than women in the Philippines. The demographics of cryptocurrency ownership also reveal that almost half of Filipino cryptocurrency owners fall within the 18-34 age bracket (46%), while 35% are between 35-54 years old.  

Top Cryptocurrencies Owned by Filipinos

Bitcoin reigns supreme as the most popular cryptocurrency among Filipinos, with an estimated 37% of Filipino cryptocurrency owners holding it. This aligns with global trends, where Bitcoin maintains its position as the most widely recognized and traded cryptocurrency.

Binance has established itself as a leading platform in the Philippine cryptocurrency market. It offers a diverse range of digital assets and a comprehensive platform that caters to the varying needs of Filipino traders, from beginners to seasoned investors.  

Reasons for High Cryptocurrency Ownership in the Philippines

Several factors contribute to the widespread adoption of cryptocurrencies in the Philippines:

Factor	Description
Increased Awareness	Filipinos exhibit a high level of awareness regarding cryptocurrencies, leading to a greater inclination to acquire them.
Play-to-Earn Games	The popularity of play-to-earn games, such as Axie Infinity, has significantly boosted cryptocurrency adoption in the Philippines. At one point, Filipinos constituted about 40% of the game’s player base.
Remittances	As one of the world’s largest remittance markets, the Philippines benefits from the faster and more cost-effective method of sending and receiving money from abroad that cryptocurrencies offer. The average remittance fees for cryptocurrency exchanges are notably low, hovering at 30-50 basis points.
Financial Inclusion	With a significant portion of the Philippine population lacking access to traditional banking services, cryptocurrencies provide an alternative means of accessing financial services.
Social Media Influence	Social media platforms play a key role in promoting cryptocurrencies in the Philippines by disseminating stories of financial success in the cryptocurrency market.
Investment Opportunities	Cryptocurrencies are viewed as an attractive investment avenue with the potential for substantial returns. Despite market volatility, the low barrier to entry and the possibility of significant profits make cryptocurrencies appealing to many Filipinos.
Peer-to-Peer Trading	Bitcoin peer-to-peer trading activity in the Philippines reached record highs in 2020, exceeding USD 1 million and consistently remaining above USD 500,000 since early May. This demonstrates the growing popularity of cryptocurrency transactions outside traditional financial institutions.

A key insight emerging from these factors is the strong connection between the high volume of remittances flowing into the Philippines and the popularity of cryptocurrencies. Cryptocurrencies offer a faster and more affordable alternative to traditional remittance services, which is a major driver of their adoption in the Philippines.  

Potential Risks and Benefits of Cryptocurrency Ownership

Cryptocurrency ownership presents both potential risks and benefits for Filipinos:

Benefits:

• Financial Inclusion: Cryptocurrencies can extend financial services to the unbanked population, thereby promoting financial inclusion.  
• Alternative to Traditional Finance: Cryptocurrencies offer an alternative to the traditional financial ecosystem, potentially giving individuals more control and flexibility over their finances.  
• Investment Opportunities: Cryptocurrencies can present significant investment opportunities, with the potential for high returns.  
• Cross-Border Transactions: Cryptocurrencies facilitate easy and cost-effective cross-border transactions, which is particularly beneficial for Filipinos receiving remittances from abroad.  

Risks:

• Volatility: The cryptocurrency market is characterized by high volatility, with the value of digital assets subject to dramatic fluctuations. This volatility poses a significant risk for investors.  
• Scams and Phishing Attacks: The cryptocurrency market is susceptible to scams and phishing attacks, where individuals may be tricked into divulging personal information.  
• Lack of Regulation: The absence of clear and comprehensive regulations in the cryptocurrency market can expose investors to risks and create uncertainty.  
• Security Concerns: The security of cryptocurrency holdings can be a concern, as digital assets are vulnerable to hacking and theft.
• Structural Breaks and Volatility Spillovers: The cryptocurrency market exhibits structural breaks and volatility spillovers, indicating an intrinsic interconnectedness and a lack of diversification. This can amplify market risks and potentially lead to cascading losses.  

A recent survey conducted among 150 individuals in the Philippines revealed that consumers perceive moderate risk across trust, privacy, security, and financial aspects of cryptocurrency investments.

Despite these perceived risks, the study suggests a generally positive consumer attitude toward cryptocurrency investment, implying the possibility of widespread adoption if expectations align with the technology’s actual capabilities.  

How the Philippine Government Is Regulating Cryptocurrency

The Philippine government is actively working to regulate the cryptocurrency market through the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC). The BSP, as the central bank of the Philippines, plays a crucial role in regulating the nation’s monetary policy and ensuring the stability of the financial system. Recognizing the evolving financial landscape, the BSP has taken several steps to regulate cryptocurrencies:  

• BSP Circular No. 944 (2017): This circular formally acknowledges virtual currencies as a legitimate payment method and mandates virtual currency exchanges to register with the BSP as remittance and transfer companies. These exchanges must comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, including adopting robust Know Your Customer (KYC) practices. As of 2020, the BSP has approved and regulated 16 cryptocurrencies.  
• Guidelines for Virtual Asset Service Providers (VASPs) (2021): The BSP introduced guidelines for VASPs to provide a more comprehensive regulatory framework for the cryptocurrency market.  
• Capital Gains Tax: The government has implemented a capital gains tax of up to 15% on cryptocurrency transactions to regulate and generate revenue from the growing digital asset market. Filipino citizens who own or trade cryptocurrencies are required to report their capital gains during their annual tax filings.  
• Executive Order on Ensuring Responsible Development of Digital Assets: This order acknowledges the potential illicit finance risks associated with digital assets, including money laundering, cybercrime, and terrorism financing. It emphasizes the importance of consumer protection, financial stability, and responsible innovation in the digital asset space.  

The SEC also plays a significant role in regulating the cryptocurrency market by overseeing securities, investments, and financial instruments. The SEC has issued advisories on initial coin offerings (ICOs) and cryptocurrency investments to safeguard investors and ensure compliance with securities laws.

It has also emphasized the importance of using regulated platforms for secure cryptocurrency transactions and cautioned the public about the risks associated with unregistered exchanges. Furthermore, the Philippine Stock Exchange (PSE) has expressed interest in bringing crypto trading under its jurisdiction, pending governing guidelines from the SEC.  

A key insight from these regulatory developments is that the SEC’s involvement in the cryptocurrency market could enhance investor protection and foster a more secure and transparent environment for cryptocurrency trading in the Philippines. This increased regulatory oversight could contribute to the long-term growth and stability of the cryptocurrency market in the country.  

Future Outlook for Cryptocurrency Ownership in the Philippines

The future of cryptocurrency ownership in the Philippines appears bright, with several factors pointing towards continued growth and development in the sector.

• Continued Growth: Research indicates that 59% of surveyed Filipinos intend to increase their investments in cryptocurrencies. This strong interest in digital assets suggests continued growth in cryptocurrency ownership in the Philippines.  
• Central Bank Digital Currency (CBDC): The BSP launched a CBDC pilot project, known as Project Agila, in December 2022. This project aims to enhance the Philippines’ large-value payment system and could potentially pave the way for the launch of a wholesale CBDC by 2029. This initiative could have a significant impact on the Philippine financial system and further drive cryptocurrency adoption.  
• Stablecoin for Remittances: The BSP has approved PHPC, a stablecoin issued by Coins.ph, pegged 1:1 to the Philippine peso. This stablecoin is designed to improve transaction efficiency and reduce costs for overseas Filipino workers sending remittances back home.  
• Crypto-Friendly Regulations: The Philippine government’s proactive approach to regulating the cryptocurrency market, while prioritizing investor protection, creates a favorable environment for the growth of the sector.  
• Telcoin Expansion: Telcoin, a company currently offering mobile remittance of crypto from Canada to the Philippines, has the potential to further expand its cryptocurrency services, which could be groundbreaking for the market.  
• Growing Interest in Cryptocurrency Investment: There is a high level of awareness of cryptocurrencies in the Philippines (74%), and 53% of Filipinos have expressed interest in investing in cryptocurrencies in the future. This indicates a strong potential for continued growth in cryptocurrency adoption.  

Dr. Alondra Nelson, the Director of the Office of Science and Technology Policy (OSTP) in the United States, highlights the potential of digital assets in assisting the unbanked population and promoting financial inclusion. She also acknowledges the risk of predatory practices by the crypto industry targeting vulnerable populations and the environmental challenges posed by certain digital assets that require high levels of computing power.  

A key insight from these future trends is that the potential launch of a wholesale CBDC by the BSP could significantly reshape the Philippine financial system and accelerate the adoption of cryptocurrencies. A CBDC could provide a more efficient and secure platform for digital transactions, potentially leading to wider acceptance and integration of cryptocurrencies into the Philippine economy.  

Conclusion

The Philippines has firmly established itself as a major player in the global cryptocurrency arena. The country’s high rate of cryptocurrency ownership is fueled by a confluence of factors, including increased awareness, the popularity of play-to-earn games, the need for efficient and affordable remittance services, and the potential for financial inclusion.

While the cryptocurrency market presents both risks and benefits, the Philippine government’s proactive efforts to regulate the sector and encourage responsible adoption suggest a positive outlook for the future of cryptocurrency ownership in the Philippines.

The Philippines’ unique context, characterized by its high dependence on remittances and a large unbanked population, has created a fertile ground for cryptocurrency adoption. Cryptocurrencies offer a viable alternative to traditional financial systems, providing faster, cheaper, and more accessible financial services to a wider segment of the population.

The government’s initiatives to regulate the cryptocurrency market, while ensuring investor protection, are crucial for fostering a sustainable and thriving cryptocurrency ecosystem in the Philippines. The potential launch of a CBDC and the increasing interest in cryptocurrency investment further solidifies the Philippines’ position as a global leader in cryptocurrency adoption.

As the cryptocurrency landscape continues to evolve, the Philippines is well-positioned to capitalize on the opportunities presented by this transformative technology and shape the future of finance in the country.

Sources Cited

Philippines ranks 2nd in cryptocurrency ownership globally — study – Inquirer Business, accessed December 19, 2024, https://business.inquirer.net/497380/philippines-ranks-2nd-in-cryptocurrency-ownership-globally-study

Philippines ranks 2nd in cryptocurrency ownership globally — study, accessed December 19, 2024, https://business.inquirer.net/497380/philippines-ranks-2nd-in-cryptocurrency-ownership-globally-study#ixzz8up1oCyNt

The state of digital currency and remittance in the Philippines – Tranglo, accessed December 19, 2024, https://www.tranglo.com/blog/the-state-of-digital-currency-and-remittance-in-the-philippines/

Understanding Cryptocurrency Regulations in the Philippines, accessed December 19, 2024, https://fintechnews.ph/57859/crypto/understanding-cryptocurrency-regulations-in-the-philippines/

(PDF) Cryptocurrency Investment Risks and Perceived Usefulness: Basis of Cryptocurrency Risk Management Plan – ResearchGate, accessed December 19, 2024, https://www.researchgate.net/publication/380224623_Cryptocurrency_Investment_Risks_and_Perceived_Usefulness_Basis_of_Cryptocurrency_Risk_Management_Plan

The state of cryptocurrency – Financial Executives Institute of the Philippines, accessed December 19, 2024, https://finex.org.ph/2024/05/10/the-state-of-cryptocurrency/

Legal Framework Governing Cryptocurrency in the Philippines — Respicio & Co., accessed December 19, 2024, https://www.lawyer-philippines.com/articles/legal-framework-governing-cryptocurrency-in-the-philippines

Cryptocurrency exchange license in Philippines | Prifinance Company, accessed December 19, 2024, https://prifinance.com/en/cryptocurrency-license/philippines/