The Filipino resiliency has always been an attribute that every Filipino has, which includes the “diskarte” or grit to achieve success no matter the odds. Whether it is through working multiple jobs, starting a business, or even gambling their way to success, there is nothing impossible when there is enough hard work that is being put in. Since the inception of Bitcoin and the emergence of cryptocurrency, Filipinos sought out the newest frontier in the financial markets with hopes of financial freedom.

Cryptocurrency has played a crucial role in the lives of everyday Filipino investors who are looking to attain financial freedom within the markets. Binance, the largest centralized exchange for cryptocurrency in the world, has been a reliable platform for aspiring crypto enthusiasts to participate in the market. In a 2021 blog from Binance, about 20% of the Philippine’s population , or approximately 23 million Filipinos, has interacted with cryptocurrency and about 4.21% of Binance users are from the Philippines, making the Philippines the 5th largest number of users of Binance.

However, on November 29, 2023, the Philippines’ Securities and Exchange Commission released a statement announcing the potential ban of Binance within three months’ time. Fast forward to March 25, 2024, the SEC has then requested the National Telecommunications Commission (NTC) to ban access to Binance. Although the Binance application is still accessible through unconventional means, this has prompted Filipino Binance users to pull their assets from the exchange and deter potential users to consider Binance for their cryptocurrency activities.

How did the Binance Ban affect Filipino users?

Though the chapter has been temporarily closed for Binance until VASP applications are open, what does this mean for the future of cryptocurrency in the Philippines? How does this affect the average retail Filipino cryptocurrency user? What kind of domino effect did the SEC trigger with their decision? How did the current users of Binance respond to the ban of the exchange? These are all questions that crypto enthusiasts continue to ponder as they speculate for answers.

BitDigest has decided to reach out to Michael Geron of Gainers Ground, an experienced trader who has utilized the services of Binance, on his thoughts regarding the matter:

Is the banning of Binance is a smart move by the SEC?

“As an advocate of web3 adoption and as a web3 educator in the Philippines, I believe that the SEC’s decision to prohibit Binance operation here in our beloved country, Philippines have been a wise move to shield investors from the dangers that come with using unlicensed platforms. We can all agree that the SEC’s intentions are purely based on their bureaucratic processes, ensuring that all companies, specifically in the finance industry, are fully compliant with the Philippines’ regulatory standards to protect Filipino investors. On the other hand, Binance has been accessible to millions of Filipino crypto/web3 believers since 2018 and a total of around 6.9 million Filipinos has been aware of the existence of cryptocurrency markets and have a high chance that Binance was one of their first exchanges to begin with. The move was smart in a traditional way I would say but the future will never be censored and silent, Web3 believers will always find ways to move forward with this given handicap.”

If the decision-making of the SEC continues in the future, what do you think will be the future of Cryptocurrency in the Philippines?

“In my opinion the current decision-making will slow down Web3 adoption here in our country as it creates stigma and cognitive bias that crypto/web3 is a scam. The essence of web3 is decentralization but given the situation that Binance is a centralized exchange, it will be considered as another argument. The main point of this argument is how the SEC will approach regulations and how well it can balance protecting investors' interest with promoting innovation will determine how far web3 can go in the Philippines. Continued strict regulations by the SEC might impede the innovation and web3 adoption, discouraging financial growth. On the other hand, sensible regulation can support market integrity, boost investor confidence and create a more vibrant Web3 ecosystem.”

“The regulatory strategy adopted by the SEC and its capacity to adjust to the changing environment surrounding digital assets will determine how Web3 develops in the Philippines in the future. Local exchanges were given a chance to comply with SEC regulations and I really hope that international exchanges would be given a chance to do so too.”, he added.

In an article by DLNews, Merchants on Binance peer-to-peer system scrambled to liquidate their USDT by taking a 5%-7% discount in an effort to attract buyers after the announcement. This period of panic amongst Binance merchants is an understatement as there has yet to be data released by Binance on how much of their funds were pulled out from their Filipino users.

Binance has been in the center of controversy in November of 2022 as Changpeng Zhao, also known as CZ, stepped down as the CEO of Binance as he is charged with violating the Bank Secrecy Act of the US law by failing to implement an effective anti-money-laundering program and for willfully violating U.S. economic sanctions. This has prompted CZ to plead guilty to charges. On top of that, Binance operating in the Philippines as an unregistered exchange has further solidified the decision of the Philippines’ SEC to outright ban Binance from conducting activities in the Philippines.

Additionally, in an interview with Atty, Paolo Ong, the Officer-in-charge of SEC Philifintech Innovation Office, with One News PH, he claims that Binance had no attempts to become a registered entity in the Philippines. However, CZ made two visits in the Philippines to negotiate and secure a VASP license with the Government back in June and October of 2022 when he was still the CEO of Binance. Although the issuance of VASP licenses were paused for 3 years starting on September 1, 2022,  Atty. Paolo Ong’s comment about Binance’s lack of an attempt to procure a VASP license is contradictory.

There was considerable reason to why the SEC moved to hastily ban Binance, but what is the implication to the future of cryptocurrency adoption in the Philippines? BitDigest decided to reach out to Colon Street Bets, a Cebu-based group of cryptocurrency traders and investors, on the effects of the ban on Binance with their trading and investing activities. A representative answered:

“The banning of Binance is not a big issue for experienced crypto enthusiasts as there are numerous decentralized exchanges to migrate to. However, what about the newbies who are looking into entering crypto? The Philippines is one of the biggest crypto-interested countries in the world. If the Philippines bans the biggest crypto exchange, people will be forced to go to take the risk to go to sketchy exchanges or endure higher fees on licensed local exchanges”

It is clear that cryptocurrency enthusiasts who have been in the space for a few years aren’t bothered by the Binance ban as they are able to securely transfer their assets to another exchange. However, there is a concern on inexperienced cryptocurrency users who have been accustomed to Binance to look for different options. There are risks to consider when migrating to other exchanges such as erroneously sending assets to the wrong address, depositing assets on malicious exchanges, or incurring unexpected high fees. The SEC believes that the 3-month warning of their ban on Binance was a sufficient amount of time for Filipino investors to pull their funds out in time.

Atty. Paolo Ong commented on the process to migrate the assets of Filipino Binance users which he says “The crypto-savvy people out there will find a way for sure, it's up to them to find a way to take out their money.” This shows SEC’s lack of concern for Filipino investors and contradictory to their duty to protect Filipino investors and assets. He also stated that they do not endorse any way to extract assets to aid Filipino users who have remaining assets stored in Binance after its site blockage and eventual app ban.

The banning of Binance has given Filipino binance users three options. To migrate their assets to another exchange, endure high fees by migrating to licensed local exchanges, or totally liquidate their crypto assets. For inexperienced crypto traders and investors who are having difficulty migrating their assets, total liquidation may seem like the easier route to take. 

Currently, Filipino cryptocurrency investors have migrated their assets to different exchanges, both locally registered and unregistered. There are no further statements or cause to have other unregistered exchanges to be banned, similar to Binance. However, it is not ruled out that these exchanges may be blocked until they are able to get the necessary licenses to operate in the country.

The future of cryptocurrency in the Philippines

Speculation arises as to how the SEC’s decision to ban Binance in the Philippines will affect the future of cryptocurrency. The stigma of cryptocurrency as an industry filled with “scams” and “ponzi schemes” has been a problem since its popularization. Ralph Recto, the Secretary of the Department of Finance, has shared his thoughts on cryptocurrency. He states: “We have to be careful with these since many cryptocurrencies are scams and not all of them are probably viable”. 

The sentiment being pushed about the potential harmful effects on Filipino investors is an attack on their confidence towards cryptocurrency adoption. Many Filipino crypto enthusiasts questioned SEC and stressed the concern of the lack of action against illegal gambling sites and unsolicited SMS texts promoting scams and gambling. To these crypto investors, they claimed the SEC was being hypocritical in their agenda to protect investors from financial losses when there are other scams more rampant than the ones in cryptocurrency. 

Jed Tan, AKA TraderKreios from KreiosLabs, provides his thoughts on the hostile campaign against cryptocurrency by the SEC. He comments, “In my personal opinion banning Binance is not a smart move at all. The decision by the SEC to ban Binance is a complex issue with no real easy answers but if I was asked, it's definitely not a smart move. I get the main concern is to protect consumers and Filipino investors but there are other bigger things that put investors at risk which the SEC is not banning. But nonetheless, this move simply stifles innovation and excessive regulation will hinder crypto adoption.”

“If this continues, all the other major exchanges might get banned as well, which ultimately limits investor options." he added.

The recent backlash against cryptocurrency may cause future Filipino investors to lose confidence in cryptocurrency. If the SEC continues to discourage Filipinos from participating in cryptocurrency and bar access, mass adoption would be a near-impossible feat due to its tight regulations and bans.

The banning of Binance has given Filipino binance users three options. To migrate their assets to another exchange, endure high fees by migrating to licensed local exchanges, or totally liquidate their crypto assets. For inexperienced crypto traders and investors who are having difficulty migrating their assets, total liquidation may seem like the easier route to take. 

Currently, Filipino cryptocurrency investors have migrated their assets to different exchanges, both locally registered and unregistered. There are no further statements or cause to have other unregistered exchanges to be banned, similar to Binance. However, it is not ruled out that these exchanges may be blocked until they are able to get the necessary licenses to operate in the country.

As of now, there is no cause to worry about the future of cryptocurrency. The SEC had probable cause to ban Binance from operating in the Philippines. However, if the SEC continues to crack down on cryptocurrency-related activities in the Philippines with aggression, the future of cryptocurrency may be in peril, hindering millions of Filipino investors' access to financial freedom through cryptocurrency.