The UnionBank of the Philippines, along with several other Filipino banks, is set to revolutionize cross-border payments through the launch of PHPX, a multi-issuer stablecoin developed on the Hedera Distributed Ledger Technology (DLT) network. This groundbreaking initiative, spearheaded by Singapore-based startup Just Finance, targets the vital remittance market that underpins the Philippine economy. Remittances constitute a significant portion of the country’s GDP, making swift, secure, and efficient transactions imperative for millions of Filipinos who rely on financial support from abroad.
The development of PHPX stands to transform not only cross-border payments but also promises to enhance financial inclusion and innovation within the Philippine banking sector. The principal participants in this initiative include major institutions like the UnionBank of the Philippines, particularly through its fintech arm UBX, as well as other notable banks such as Rizal Commercial Banking, Cantilan Bank, and the Rural Bank of Guinobatan. By leveraging the advanced capabilities of Hedera’s DLT technology, these banks aim to establish a more user-friendly and inclusive financial ecosystem.
UnionBank’s Blockchain Journey
UnionBank has been at the forefront of blockchain innovation. Through its fintech arm UBX, the bank embarked on pioneering efforts as early as 2018 when it launched a token-based automated clearing house (ACH) aimed at facilitating payments for rural and community banks that were not part of the National Retail Payment System (NRPS). This early system utilized a permissioned version of Ethereum and introduced PHX, a backend token distinct from the newly proposed PHPX stablecoin.
The original ACH system exemplified UnionBank’s commitment to utilizing blockchain technology to address gaps within the existing financial infrastructure. However, as technology evolved, so did the bank’s vision. Recognizing the need for a more dynamic and publicly exchangeable stablecoin, UBX CEO John Januszczak emphasized expanding beyond their closed-loop ecosystem. The presentation of the PHPX concept by David Inderias and Mikko Perez from Just Finance resonated deeply with Januszczak, especially given the critical priority of improving cross-border remittances.
The Importance of Remittances
Remittances are economically crucial in the Philippines, where they represent roughly 10% of the nation’s GDP. As the World Bank reported, the country’s remittances amounted to $40 billion in 2024, underscoring the critical need for a fast, reliable, and efficient payment system. The PHPX initiative aims to revolutionize the remittance process, moving away from traditional methods that fail to keep pace with modern economic demands.
UBX CEO John Januszczak highlighted a significant issue with current systems: the lack of control workers abroad have over their earnings. Most remittance channels do not allow direct and real-time management of expenses such as tuition fees or insurance payments. This is where PHPX steps in. By enabling real-time and direct management of funds, workers abroad can ensure their hard-earned money is spent effectively and on the intended needs, offering greater financial autonomy even while they are away from home.
Simplified User Experience
PHPX is designed with usability in mind, promising a simplified and seamless experience for users. One of the significant innovations of this stablecoin is its backend system, which handles the conversion into PHPX or other stablecoins. Users only need to select the amount they wish to send, with the system handling all technical conversions, making functionalities straightforward and accessible.
Upon conversion, the funds become available through various means such as bank deposits, digital wallets, or cash pickups, depending on user preference. As this system evolves, there might be provisions for consumers to gain direct access to PHPX, pending regulatory approval. This would significantly expand user capabilities, allowing for more flexible and immediate financial interactions that cater to a diverse array of needs.
Ensuring Stability and Compliance
The PHPX stablecoin places a high priority on security and stability. Reserves backing the stablecoin will primarily be held in segregated bank trust accounts, composed of government bonds and a small cash balance to ensure settlements. These funds are ring-fenced, meaning they are protected even in the event of a bank’s failure, ensuring the stablecoin’s reliability and trustworthiness. Additionally, Just Finance’s non-custodial role further bolsters the overall security of the PHPX ecosystem.
Compliance with international regulatory frameworks is another key concern for the PHPX initiative. If PHPX were classified under Group 2 by the Basel Committee’s crypto-asset rules, the stablecoin could become expensive for banks to hold. To mitigate this risk, PHPX is being designed to qualify as a low-risk Group 1b stablecoin. Utilizing the permissioned network capability of the Hedera DLT further ensures compliance. This initiative also aligns with regulations set forth by Bangko Sentral ng Pilipinas (BSP) and ensures compatibility with the EU’s MiCAR regulations or their regional equivalents.
Advantages Over Traditional Payments
The UnionBank of the Philippines, along with other Filipino banks, is set to revolutionize cross-border payments with the introduction of PHPX, a stablecoin built on the Hedera Distributed Ledger Technology (DLT) network. This groundbreaking initiative is led by Singapore-based startup Just Finance and targets the vital remittance market that is essential to the Philippine economy. Remittances constitute a substantial portion of the country’s GDP, making swift, secure, and efficient transactions crucial for millions of Filipinos dependent on financial support from overseas.
PHPX is poised to not only transform cross-border payments but also to advance financial inclusion and innovation within the Philippine banking sector. Key players in this initiative include major institutions like UnionBank of the Philippines, especially through its fintech arm UBX, and other prominent banks such as Rizal Commercial Banking, Cantilan Bank, and the Rural Bank of Guinobatan. By leveraging Hedera’s advanced DLT capabilities, these banks aim to create a more user-friendly and inclusive financial ecosystem, benefiting millions of Filipinos.
