Philippine blockchain push runs ahead of safeguards

By Paolo Joseph Lising

WHAT WAS JUST a few years ago a fringe technology for startups, blockchain is now entering the machinery of the Philippine state. Yet its rapid growth is outpacing the protections needed to safeguard everyday users — a challenge seen across markets worldwide. The Senate has approved the CADENA Act, as the Securities and Exchange Commission (SEC) heightened its oversight to safeguard investors, while the Bangko Sentral ng Pilipinas (BSP) is cautiously yet proactively shaping the Philippines’ digital future. The promise is sweeping: greater transparency, reduced corruption and a more inclusive financial system.

However, blockchain’s promise carries a dark reality. For example, the Philippine National Police said it logged 311 online investment scams last year, including 12 involving cryptocurrency. Last month, local users reported phishing attacks and unauthorized access, including a recent incident at Coins.ph, the country’s most widely used licensed exchange. During the Holy Week break, users of UNO Digital Bank reported missing or unauthorized InstaPay transfers. These risks extend to global platforms that users in the Philippines can easily access, including potential exposure to the recent $280-million hack of the Solana‑based Drift Protocol, an exploit that analysts have linked to a suspected North Korea‑affiliated operation.

The events are not a series of isolated failures; they reflect a pattern where adoption is outpacing protection. The risks inherent in this trend raise the question of whether this rapid growth represents real advancement or merely a focus on perception rather than substantive development. My recent paper shows that blockchain and digital token systems can fund development, but they are not inherently inclusive. Without careful design, regulation and user readiness, benefits accrue to wealthier, better informed participants, leaving vulnerable populations exposed to greater financial risk. In other words, blockchain as a development infrastructure can reproduce inequality.

Blockchain risks stem from three areas — the inherent nature of technology, system design choices and the real-world environments of its users. Blockchain systems rely on irreversible transactions, complex interfaces and volatile markets, features that often constrain everyday users. Product builders encode decisions about who owns assets, who earns yield and who absorbs losses, often favoring early entrants and those with capital despite the appearance of open access. Lastly, protocols deploy blockchain in environments with uneven financial literacy, limited access to reliable information and varying levels of institutional protection.

The scams, unauthorized transactions and platform failures that users experience come from how digital financial systems are built and used. For instance, the Philippines ranks 61^st out of 67 economies in the IMD Digital Competitiveness Index, reflecting weaknesses in the overall digital environment. Financial literacy remains low, with an OECD/INFE score of 58 out of 100. At the same time, a survey by the analytics technology group YouGov shows that only 46% of Filipinos fully understand cryptocurrencies.

Furthermore, infrastructure constraints compound these gaps. The Philippines ranks 104^th globally in internet affordability, according to the Surfshark Digital Quality of Life Index. This comes as Filipino participation in cryptocurrency expands rapidly. The country ranks ninth globally in crypto adoption, according to Chainalysis (2024). This combination of high adoption and limited financial and digital capacity means users are entering complex, volatile systems without sufficient tools to assess risk.

The Philippines’ experience with Axie Infinity back in 2021 illustrates this tension. At its peak, the “play-to-earn” system was widely framed as a new model of financial inclusion, enabling users to earn income by participating in a blockchain-based game economy. What appeared as inclusion masked a structural divide between ownership and labor. Asset holders captured the upside, while participants supplied labor and absorbed volatility. When token prices fell, these differences became decisive. Early entrants and capital holders were able to exit or adapt. Later users, often dependent on the system for income, were left exposed.

As the CADENA Act proceeds in the House of Representatives, the Philippines’ focus has shifted from fringe adoption of blockchain to actual governance. Policymakers are driving the adoption of blockchain to promote transparency and combat corruption. Yet, these narratives can obscure a more immediate challenge: protecting users operating within these systems. A key use case being floated in the industry is payments and remittances, one of the country’s most vital economic lifelines, with inflows reaching $35.63 billion in 2025, or roughly 7.3% of GDP, according to the BSP. The immense scale of this linkage means any systemic failure could severely impact the entire economy.

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Paolo Joseph Lising is an ALM candidate in Global Development Practice at Harvard Extension School. Some of the insights in this article are drawn from his peer-reviewed paper, “Reassessing Blockchain in Global Development: Tokenization of Infrastructure, Social Impacts and the Axie Infinity Case in the Philippines,” which examines the social implications and equity challenges of blockchain adoption in emerging economies. He is also a researcher at Sora Ventures, a venture capital firm specializing in Web3 and blockchain investments in Asia.