Union Bank of the Philippines and Hex Trust, a Hong Kong-based digital asset custodian, today announced that the bank was partnering with Hex Trust to provide digital asset custody services to it as it enters the digital asset sector.
Fast facts
- As part of the collaboration, Hex Trust will provide digital asset custody as an internal service for Union Bank employees as a pilot run in preparation for a fully commercialized digital asset custody service for the bank’s customers. The service is in compliance with Bangko Sentral ng Pilipinas, Union Bank said.
- “Digital assets are here to stay, whether it be in the form of cryptocurrency, [non-fungible tokens] or tokenized assets, and we are seeing more market demand for these,” said Henry Aguda, chief technology and operations officer and chief transformation officer at Union Bank, in a statement. “We are excited to be the first Philippine bank to pilot a custody service for digital assets for our own employees, overseen by the BSP, so that we can prepare the groundwork for a safe and protected system for customers’ digital assets.”
- The bank’s new service comes amid growing demand for digital assets in Southeast Asia. Data from a Bangko Sentral ng Pilipinas report showed that about 70 percent of the adult population of the country remain unbanked, rendering them unserved by financial institutions. “Digital assets can be used as an alternative mode of payment to the underserved, and can drastically cut down transaction costs on remittance services,” Calvin Shen, head of sales and business development at Hex Trust told Forkast.News in an email. The Philippines has one of the highest rates of cryptocurrency use in Asia, according to data provider Statista.
- Blockchain play-to-earn gaming — in particular, Axie Infinity — has exploded in popularity in the Philippines, with users being able to earn crypto and non-fungible tokens (NFTs) through playing the game.
- “The demand for digital assets in Southeast Asia is very strong and continues to grow. There are many reasons for this, including the demographics of the younger population who are digitally savvy, a mobile-first generation, and attached to online tools,” Alessio Quaglini, CEO of Hex Trust, told Forkast.News in an email. “Many families are even replacing their household income and getting out of poverty through playing the blockchain-based game every day.”
- Quaglini said that the legal frameworks in Southeast Asia are less mature compared to Europe and the United States, which means it’s easier for innovative fintech companies to enter the market. “Additionally, financial markets in SEA are less developed, which means blockchain innovation is easier to implement with fewer legacy systems and regulatory hurdles to overcome. This provides a significant opportunity for Southeast Asia to attract new capital, blockchain companies and talent, and position themselves effectively for the digital assets revolution,” Quaglini said. “We’re seeing the retail demand in Southeast Asia high at present, which is attracting the attention of institutions (banks, exchanges, funds, corporations) that are now starting to enter the market.”