A group of Filipino banks is preparing to introduce PHPX, a peso-backed multi-issuer stablecoin, later this year, which will initially operate on the Hedera Distributed Ledger Technology (DLT) network. Among the banks participating are UnionBank of the Philippines, Rizal Commercial Banking, Cantilan Bank, and the Rural Bank of Guinobatan. While the Singapore-based Just Finance is the driving force behind the project, the banks themselves will have significant input into the stablecoin’s governance structure.
The primary goal of PHPX is to facilitate cross-border payments, particularly for remittances. However, the project’s ambitions go beyond merely launching a stablecoin; it aims to create a platform for exchanging stablecoins in various currencies, addressing a growing need in the cross-border payments space.
UnionBank’s Blockchain Experience Fuels PHPX Launch
UnionBank, through its fintech subsidiary UBX, has been a pioneer in blockchain adoption in the Philippines. The bank has long used blockchain technology to manage a token-based automated clearing house (ACH) that facilitates payments for rural and community banks not connected to the national retail payment system (NRPS). This system, which has been in place since 2018, operates on a permissioned Ethereum-based platform, using a token called PHX (distinct from PHPX).
UBX’s CEO, John Januszczak, expressed the need for a publicly exchangeable stablecoin that could extend beyond their closed-loop payment system. This desire for a broader application was one of the key reasons why Just Finance’s proposal for PHPX found traction at UBX.
Tackling Remittances and Cross-Border Payments
The Philippines is one of the largest recipients of remittances globally, with the World Bank estimating that the country received over $40 billion in remittances in 2024, constituting approximately 10% of its GDP. This highlights the immense potential for stablecoin adoption in remittance payments, which PHPX aims to address.
Januszczak pointed out that traditional payment methods have failed to keep pace with modern commerce, making it difficult for workers abroad to manage their finances in real-time. He envisions PHPX enabling workers in countries like the United States to make direct payments, such as school tuition, to beneficiaries back home in the Philippines. PHPX could also expand the scope of remittances, allowing overseas Filipinos to invest in insurance products or wealth management options, offering greater control over their funds.
Efficient Integration for Consumers
The PHPX stablecoin will largely function behind the scenes, allowing consumers to send funds as they would through a conventional payment system. For example, sending $500 from abroad will trigger an automatic exchange for PHPX or another stablecoin, which can then be deposited into a bank account, a GCash wallet, or collected at an over-the-counter location. While access to PHPX for consumers is a potential future development, regulatory approval will be required before such an option is available.
Multi-Currency Stablecoin Exchange for Cross-Border Transactions
A key component of PHPX’s design is the creation of a multi-currency stablecoin exchange. The system will support the swapping of PHPX with other foreign currency stablecoins, such as USD, SGD, or JPY, enabling smoother cross-border transactions. Liquidity providers will play an essential role in this process, and while banks are expected to initially fulfil this role, the market could open up to qualified investors as the system becomes more decentralised.
Ensuring Compliance and Security
The stability and security of PHPX are top priorities for Just Finance. In the event that a participating bank experiences financial difficulties, the stablecoin’s reserves will be kept in segregated trust accounts, holding primarily government bonds with a small cash balance for short-term settlements. These accounts are ring-fenced from the bank’s general liabilities, ensuring that PHPX remains bankruptcy remote, provided no fraud occurs.
Another regulatory consideration is compliance with the Basel Committee’s rules for crypto-assets. To avoid expensive capital requirements for the banks involved, the PHPX stablecoin will operate on a permissioned DLT network, meeting the Basel Committee’s criteria for stablecoins classified as low-risk (Group 1b). Hedera DLT was chosen for its alignment with these regulatory standards. Furthermore, PHPX will be designed to meet the requirements set by the Bangko Sentral ng Pilipinas (BSP), which includes compliance with European MiCAR regulations or their regional equivalents.
Advantages Over Traditional Bank Payments
Stablecoins offer a significant advantage over traditional bank payments by eliminating the need for interbank settlement. In the Philippines, the National Retail Payment System (NRPS) imposes a limit of $1,000 on transactions to manage settlement risks. While NRPS payments are credited to recipients almost instantly, they do not settle in real time. In contrast, blockchain systems like PHPX allow for faster clearing and settlement, streamlining the process and improving efficiency.
Looking Toward the Future
The PHPX stablecoin is currently awaiting approval from the central bank, Bangko Sentral ng Pilipinas (BSP), with a potential launch window between May and July 2025. While remittances are the immediate focus, Just Finance’s David Inderias highlighted that PHPX could also be used for larger cross-border trade transactions and potentially in domestic retail payments at point-of-sale (POS) in the future. However, this expansion will only occur under the supervision of the regulator.
The launch of PHPX represents an exciting step forward in the Philippines’ digital finance landscape, promising to revolutionise the way Filipinos abroad send money home while also opening the door for broader use cases in global trade and domestic payments. As the project unfolds, its success will depend on regulatory approval, the establishment of a robust liquidity framework, and consumer adoption.
