Why Crypto in the Philippines is Booming (2024 Update)

With many local citizens playing blockchain games for a living, crypto in the Philippines is on the rise. 

Although more than 40% of the country’s population remains unbanked in 2024, the internet coverage is pretty high. Therefore, it’s no wonder that cryptocurrencies are gaining popularity, especially in rural areas.

The legal status of blockchain and crypto plays not the last role in the adoption of the new technology. 

This article reviews the key aspects of crypto in the Philippines aiming to help those who want to invest in crypto while staying in this country.

Key Takeaways

• Crypto in the Philippines is not legal tender, but crypto transactions are officially allowed.
• The Central Bank of the Philippines regulates crypto exchanges and other VASPs.
• Crypto earnings are subject to a capital gain tax that equals 15%. Also, in some specific cases, an income tax (up to 35%) and VAT (12%) may apply.

Current State of Crypto in the Philippines

In 2021, NTRC Tax Research Journal, an official media backed by the Philippines government, conducted research on the regulation of cryptocurrencies within the region. The report revealed that out of the 300 million cryptocurrency users worldwide, 6.9 million were from the Philippines.

Another report from Statista, in turn, predicts that this number is expected to reach 13.95M by 2028.

Obviously, the interest in the new digital payment method tends to grow among the local population. At the same time, the Philippine government creates a clear regulatory framework to boost the usage of the new technologies.

In such conditions, it’s no wonder that the 2023 Chainalysis’ Global Crypto Adoption Index ranks this region sixth. Thus, the Philippines stands forth as one of the leading countries in Southeast Asia when it comes to cryptocurrency adoption.

Is Crypto Legal in the Philippines?

Anyone wishing to use crypto in the Philippines may do that freely as crypto transactions are legal in this region. Yet, since cryptocurrencies are not issued by the Central Bank (Bangko Sentral ng Pilipinas, a.k.a. BSP), they are not legal tender.

Crypto is not only a subject of investment or trading activities in the Philippines. It also often serves the following purposes:

• Remittance. A survey conducted by the Philippine Statistics Authority revealed that in 2022, there were close to 2 million migrant workers in the Philippines. Therefore, many local companies prefer paying salaries in crypto to reduce costs and simplify remittance processes.
• Means of payment. Many local merchants accept crypto as an additional payment method.

Who Regulates Crypto in the Philippines?

The aforementioned BSP regulates crypto exchanges registered under Circular 944. 

Thus, in 2021, it released Guidelines for Virtual Asset Providers (VASP) requiring crypto companies to comply with the following rules:

• Obtain a Certificate of Authority from the BSP
• Create a secure environment for digital wallets and customers’ data to protect them from hackers
• Introduce appropriate KYC/AML processes to prevent potential money laundering and terrorist financing activities

Besides, anyone wishing to run a cryptocurrency exchange must register a remittance and transfer company with the BSP.

Another legal instance regulating crypto in the Philippines is the Securities and Exchange Commission (SEC). It has already issued some guidelines and recommendations concerning cryptocurrency usage. 

As reported by the local media platform Business World, it plans to release new rules in the second half of 2024, aiming to safeguard the interests of investors.

Crypto Tax in the Philippines

In the Philippines, cryptocurrencies have no official definition. Neither has the Bureau of Internal Revenue released any specific guidelines on this question.

Nonetheless, crypto transactions in the Philippines are subject to a capital gain tax of up to 15%. This tax applies to all the profits one obtains in crypto, be it investment, trading, or the income derived from selling goods and services.

In some specific situations, additional taxes may apply, such as:

• Income tax. This tax may apply to the profits derived from long-term crypto investments. The size of the tax varies depending on the net taxable income and may reach 35%.
• Value Added Tax (VAT). The income obtained from selling goods and services may also be subject to VAT which equals 12%.

Note that any attempt to evade taxes is considered a crime in the Philippines. The punishment is a fine that ranges from P500,000 to P10,000,000. In the worst-case scenario, you may be imprisoned for six to ten years.

How To Buy Crypto in the Philippines

The easiest way to buy crypto in the Philippines is through a centralized exchange.

The process is usually quite simple and involves the following steps:

1. Create an account on an exchange.
2. Pass the KYC procedure by uploading all the required documents.
3. Deposit fiat via any of the supported methods.
4. Exchange fiat to crypto through the platform’s interface.

After that, it’s recommended to withdraw your assets to a self-custodial wallet for better protection of your funds.

Crypto Exchanges in the Philippines

With such favorable conditions, many global exchanges offer their services to local citizens in the Philippines. The list of such platforms includes:

• Uphold
• Coinmama
• Bitfinex
• Bithumb
• KuCoin

Aside from the global platforms, there are also local exchanges that one can rely on to buy crypto in the Philippines. The list of platforms with a VASP license includes:

• Philippine Digital Asset Exchange (PDAX)
• Coexstar
• Coins.ph
• Maya.ph
• XenRemit

Crypto Companies in the Philippines

In addition to the cryptocurrency exchanges mentioned above, there are many other crypto startups with an official registration in the region. Among them are the following:

• Avaland: an innovative startup creating Sacred Trees NFT collection with the goal of preserving real trees
• Unlockd: a DeFi protocol providing liquidity to NFT holders
• Vasu International Payment Solutions: a payment processor offering its customers a variety of payment methods including crypto
• Twala: a blockchain-based solution for tamper-proof digital signatures
• Alaga Health: a digital health marketplace and health services hub

The Philippines has become home not only to crypto startups but also to many VC funds seeking potential unicorns. 

Thus, Infinity Ventures Crypto, Delphi Ventures, Yield Guild Games, Gentree Fund, and many other blockchain investment companies reside in the Philippines.

FAQ

Is crypto taxed in the Philippines?

Yes, if you make profits while being engaged with crypto in the Philippines, you must pay a capital gain tax that equals 15%. Also, in some specific cases, an income tax or VAT may apply.

Is Bitcoin mining legal in the Philippines?

There is no explicit ban on crypto mining in the Philippines. Therefore, one may freely get involved in crypto-mining activities. Companies providing cloud mining services have to obtain a VASP license, though.

Can I withdraw Bitcoin in the Philippines?

Yes, there are many services helping cryptocurrency users cash out their assets in the Philippines. Some of the most popular solutions include PayMaya, GCash, and InstaPay.

Who regulates crypto in the Philippines?

The Central Bank, a.k.a. the Bangko Sentral ng Pilipinas (BSP) regulates cryptocurrencies under the Circular 944. The document, among others, contains the guidelines for VASPs and crypto exchanges.