Philippines Proposes a Bitcoin Reserve With Up To 20 Years Lock-Up

A new legislative proposal in the Philippines seeks to diversify the nation’s sovereign reserves by gradually acquiring Bitcoin. If passed, the Philippines’ central bank will purchase up to 10,000 BTC and lock them up for up to 20 years.

Philippines Proposes a Strategic Bitcoin Reserve To Purchase BTC

Congressman Miguel Luis Mora Villafuerte (Migz) has proposed House Bill 421, which would require the Bangko Sentral ng Pilipinas (BSP) to buy Bitcoin. Under the proposed bill, the central bank of the Philippines will be tasked with acquiring 2,000 Bitcoin annually over a five-year period to build up a total of 10,000 BTC in the bank’s balance sheet.

As suggested, the Bitcoin must be stored at several secure places and have the supervision of the central bank to reduce risks and enhance resilience. In his bill, the congressman himself promoted Bitcoin as a strategic asset that could help the Philippines to salvage its economic future.

He referred to Bitcoin as a form of digital gold that could help it reduce its dependence on the US dollar and cushion the country’s balance sheet against a shocking global event. The congressman cited models in El Salvador, Brazil, Switzerland, and Poland, along with an ongoing proposal by US Senator Cynthia Lummis, as a guide for the Philippines.

The Bill Could Make the Philippines a Sovereign Digital Asset Manager

The bill outlines more than purchasing Bitcoin; it includes steps to make the Philippines a sovereign digital asset manager. For example, after the Bitcoin acquisition, the reserve must not be used within 20 years, save for several exceptions regarding national debt obligations. 

The bill imposes explicit legal restrictions on the central bank that are restrictive on the sale, swap, or disposal of the assets during the lock-up period unless the nation has to clear off sovereign debt.

Transparency and accountability also have a wider context in how the bill is set. It proposes the adoption of a proof-of-reserves system, whereby the BSP governor would be required to make regular (quarterly) public disclosures of the size of the reserves, as well as the wallet addresses.

The bill also has post-lockup guardrails. By the end of 20 years, the sale of a Bitcoin store would remain limited. According to the bill, the BSP would not be permitted to sell or use up more than 10% of its reserve in any two-year interval.

If Passed, the Philippines Could Get the Early Mover Advantage

Currently, only 11 countries have reserves that include Bitcoin. These countries hold a combined 480,196 BTC – roughly 2.29% of all Bitcoin in existence. If this bill is passed, the Philippines will become one of the first few countries in the entire world to legislate the creation of a sovereign Bitcoin reserve.

The Philippines also stands to benefit from holding a Bitcoin reserve due to BTC’s potential for appreciation. Countries like El Salvador have benefited from holding Bitcoin. However, a major challenge to the bill being passed is the country’s current conservative approach to the regulation of cryptocurrencies.