Union Bank in the Philippines, funded by Aboitiz Equity Ventures, has launched a stablecoin with the ticker PHX. In doing so, Union Bank has become the first bank in the country to conduct transactions via a blockchain. PHX transactions are being implemented a platform specifically meant to connect listed banks to rural banks, bolstering financial inclusion and ease of transacting.
UnionBank aims to fulfill its purpose of promoting inclusive prosperity and add value for customers and communities through innovative solutions in support of the digital financial inclusion advocacies of the Bangko Sentral ng Pilipinas (BSP).
Faith in Crypto
PHX is a stable store of value and medium of exchange that can be programmed with self-executing logic. It’s value is backed and guaranteed by the Philippine Peso at all times. The ability to back it to a relatively stable fiat makes the protocol centralized and manipulable but removes undesired volatility emitted by crypto markets.
Successful transactions by three rural banks on the network were recorded and reinvigorated Union Bank’s faith in their technology.
Ripple has long said that their ledger and protocol allows for improved ease of transacting when it comes to inter currency transactions. Using the native XRP token, clients can easily convert one currency to another, minimizing costs and translation losses.
Reconciliation of statements, balance management, and account investigations become much easier due to increased clarity in operations and the state of accounts.
To break down the patent, many charts depicting the process are shown by BofA; it seems to show a process whereby two clients who are each transacting in a different currency, can easily exchange value with each other using Ripple’s protocol. By managing a validator node, BofA would act as the intermediary for the transaction between their client and the other bank.
PHX has been designed to be interoperable and may be incorporated on various exchanges and wallets in the future as a way to make transactions and hedge against volatility.
Union Bank aims to promote financial inclusion and make transacting easier and more cost-efficient for those living in rural or remote areas. As part of a sustained effort from the government for financial inclusion, Union Bank used blockchain to tokenize fiat to remit from OCBC Bank in Singapore to an account holder in a remote coastal region in the Philippines.
Cryptocurrency Versus Decentralization
The trend over the last year has shown us that banks are not opposed to cryptocurrency and the use of distributed ledgers, they are seemingly only opposed to decentralized protocols that they cannot control.
It isn’t surprising that a bank has launched its own cryptocurrency, especially after all the free marketing crypto publications gave J.P. Morgan after the launch of JPM Coin.
Regulators are likely to stay put when it comes to cracking down on bank run cryptos despite the potential for money laundering being higher than that of a decentralized protocol.