Philippine Guide To Cryptocurrency Investment: Getting Started

Cryptocurrency is an increasingly popular investment vehicle in the Philippines, with an estimated 4.13 million people investing in it. The country has a diverse and rapidly evolving cryptocurrency landscape, driven by local innovation and global trends. The Central Bank of the Philippines has issued guidelines on cryptocurrency exchanges, and there are several licensed exchanges operating in the country, offering users a secure and regulated platform to buy, sell, and trade. Filipinos can use various platforms, such as Binance, Kraken, and ByBit, to invest in cryptocurrencies. These platforms offer a wide range of cryptocurrencies, low fees, and advanced trading features. Before investing, it is important to understand the risks associated with cryptocurrencies, such as their volatile nature and the potential for hacking.

Legitimate exchanges: Philippine Digital Asset Exchange (PDAX), Coins.ph, Juancash, Bexpress Pro

If you're looking to invest in cryptocurrency in the Philippines, it's important to find a legitimate exchange first. Here are some details about four well-known and legitimate exchanges in the country:

Philippine Digital Asset Exchange (PDAX)

PDAX is a licensed Virtual Asset Service Provider regulated by the Central Bank of the Philippines (BSP). Launched in 2018, it offers an order-book exchange platform with access to top cryptocurrencies and other digital assets. PDAX allows investors to trade coins like Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) and also supports NFTs and tokenized treasury bonds. It is designed to be user-friendly, with a simple interface and quick registration. The platform offers flexibility, allowing users to manage their investments whenever and wherever they want.

Coins.ph

Coins.ph is another BSP-regulated exchange that allows users to trade cryptocurrencies like BTC, ETH, Axie Infinity Shards, and Smooth Love Potion (SLP). It offers free trading, but there is a small fee for withdrawals.

Juancash

Juancash is a Virtual Asset Service Provider (VASP) that provides a platform for converting fiat money to cryptocurrency and vice versa. The mobile application is available for download on both Google Play and the Apple Store.

Bexpress Pro

Bexpress Pro is a trading platform licensed by the BSP and affiliated with major banks in the Philippines. It currently offers BTC, ETH, and USDT but is working on expanding its coin offerings.

When choosing an exchange, it's important to consider factors such as security, fees, payment methods, and the range of cryptocurrencies offered. It's also essential to understand the risks associated with investing in cryptocurrencies and to use only BSP-regulated exchanges to mitigate those risks.

Cryptocurrency regulations: Crypto is legal but not a legal tender

Cryptocurrency is legal in the Philippines, with the country becoming a hotbed for crypto adoption. However, it is important to note that cryptocurrencies are not considered legal tender. This means that while their use is permitted, they are not issued by the Bangko Sentral ng Pilipinas (BSP), the country's central bank.

The BSP has acknowledged the potential benefits of virtual asset (VA) systems, such as faster and more economical means of transferring funds, but also recognises the associated risks, including the anonymity, velocity of transactions, volatility of prices, and global accessibility.

To mitigate these risks, the BSP has implemented a regulatory framework for virtual currencies. The BSP issued Circular No. 944 in 2017, recognising virtual currencies as a valid payment method. This circular mandated virtual currency exchanges to register with the BSP and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

The BSP introduced the Guidelines for Virtual Asset Service Providers (VASPs) in 2021, providing a comprehensive regulatory framework for virtual currency exchanges. Under these guidelines, VASPs must obtain a license from the BSP and implement effective Know Your Customer (KYC) and AML/CTF measures. They must collect customer identification data, monitor transactions, and report suspicious activities to prevent money laundering and terrorist financing.

The Securities and Exchange Commission (SEC), the government agency regulating securities, investments, and financial instruments, has also issued advisories and warnings to investors about the risks associated with initial coin offerings (ICOs) and cryptocurrency investments. The SEC mandates that companies conducting ICOs must register with them and comply with securities regulations.

Risks: Volatile asset, potential for hacking

Cryptocurrency is a volatile asset, and its value is determined by how much of the world adopts it as a legitimate form of currency. The value of most cryptocurrencies is determined by the people who hold the majority of the value of that coin. This means that no central groups or institutions can interfere with or manipulate the value.

However, this also means that the price of a cryptocurrency can fluctuate dramatically in a single day. For example, in the aftermath of Tesla CEO Elon Musk's announcement in May that Bitcoin would no longer be accepted as a mode of payment, $365 billion was wiped out in the cryptocurrency market within the same week.

Another risk to consider is the potential for hacking. Cryptocurrency exchanges are common targets for hackers, and there have been numerous instances of exchanges being compromised and users' funds being stolen. While some exchanges may compensate their customers in the event of a hack, others may simply go out of business, leaving users with no recourse.

To protect yourself from hacking, it is important to use a secure and reputable exchange, such as Binance or Kraken, and to withdraw your crypto to your own personal cold wallet for optimal security. It is also recommended to use two-factor authentication and a secure internet connection when accessing your exchange account.

Crypto wallets: Ledger Nano S, Trezor, Trust Wallet, MetaMask, etc

When it comes to crypto wallets, there are several options available, each with its own unique features and advantages. Here's an overview of some popular choices:

Ledger Nano S

The Ledger Nano S is a hardware wallet that connects to your computer via USB. It supports over 5,500 cryptocurrencies, including popular options like Bitcoin, Ethereum, Litecoin, Dogecoin, and Stellar. The Ledger Nano S has a compact design, resembling a standard USB storage device, and features a 128x64-pixel display. It offers robust security with a double-chip base, utilising a bank-grade secure element for added protection. Ledger wallets also use a unique blockchain open ledger operating system (BOLOS). While the Ledger Nano S doesn't have Bluetooth, the Ledger Nano X and Stax models do.

Trezor

Trezor is another well-known name in the cryptocurrency space, offering hardware wallets that store, manage, and protect your coins. Trezor wallets support over 1,000 coins and tokens and provide access to built-in cryptocurrency exchanges. The Trezor Model T stands out with its colour touchscreen display, providing a user-friendly interface. Additionally, Trezor offers a lower-cost option, the Trezor One, which has a 128x64-pixel display and physical buttons for navigation. Trezor wallets are lightweight and portable, ensuring convenience and security for your crypto assets.

Trust Wallet

Trust Wallet is a popular choice for crypto storage and management. It offers a user-friendly interface and supports a wide range of cryptocurrencies. Trust Wallet provides a secure and decentralised platform for storing and interacting with your digital assets.

MetaMask

MetaMask is a versatile crypto wallet that allows connections with hardware wallets like Trezor and Ledger. It enables you to interact with various sites and services that integrate with MetaMask. MetaMask offers features such as account balance checks, transaction signing, and contract deployment. It is a convenient option for developers and users alike, providing a bridge between different wallet ecosystems.

When choosing a crypto wallet, it's important to consider your specific needs, such as the number of supported coins, security features, user interface, and device compatibility. Each wallet has its own unique advantages, so selecting the one that aligns with your requirements is essential. Remember to always prioritise security and follow best practices to protect your crypto assets.

Investment opportunities: Long-term investing, active trading, ICOs, DeFi, mining, staking

Long-term investing

Long-term investing in cryptocurrency involves buying and holding onto certain cryptocurrencies to earn rewards over time. This is known as staking, and it is a way to make your assets work for you by generating rewards, rather than keeping them idle in your crypto wallet. Staking also contributes to the security and efficiency of blockchain projects by making the blockchain more resistant to attacks and strengthening its ability to process transactions.

Active trading

Active trading involves buying and selling cryptocurrencies frequently to take advantage of short-term price movements. It requires more time and effort than long-term investing, as traders need to constantly monitor the market and make quick decisions. There are several legitimate exchanges in the Philippines where investors can trade cryptocurrencies, including Philippine Digital Asset Exchange (PDAX), Coins.ph, Juancash, and Bexpress Pro.

ICOs

Initial Coin Offerings (ICOs) are the public sale of new virtual tokens to fund startups and other projects. They are similar to Initial Public Offerings (IPOs) but are more speculative and carry greater risk. Investors often fund the company before any product has been launched, in exchange for tokens. The Philippines has a three-pronged approach to the regulation of ICOs, with the central bank (Bangko Sentral ng Pilipinas or BSP), the Cagayan Economic Zone Authority (CEZA), and the Securities and Exchange Commission (SEC) each providing direction on consumer and investor protection.

DeFi

Decentralized Finance (DeFi) is a blockchain-based form of finance that does not rely on traditional intermediaries such as banks. DeFi applications aim to provide financial services that are more accessible, transparent, and efficient than those offered by traditional financial institutions. Ethereum is a well-known example of a blockchain with a wide variety of DeFi applications, including staking.

Mining

Cryptocurrency mining is the process of using high-powered computers to validate transactions on a blockchain network by solving complex mathematical computations. This is known as proof of work, and it requires a significant amount of time, energy, and resources. Miners are rewarded for their efforts with cryptocurrency. However, it is important to be cautious when using crypto mining apps, as there have been cases of malicious apps containing dangerous malware and adware.

Staking

As mentioned earlier, staking is the process of holding onto certain cryptocurrencies to earn rewards over time. It is a way to generate passive income from your crypto assets without having to actively trade or invest. Staking also helps to secure and validate blockchain transactions, ensuring the security and integrity of the network.

Frequently asked questions