Introduction

The Philippines has allowed cryptocurrencies to be used as legal tender. Approximately less than 2% of all known transactions in the Philippines are conducted using cryptocurrency but this does not account for transactions conducted in the informal economy. The easy conversion of cryptocurrency to fiat currency could easily be done through the Automated Teller Machines (ATMs) of the Union Bank of Philippines and other registered remittance and transfer companies.

Since the Philippines closely follows US financial regulations, the US White House Executive Order on Digital Assets released on March 2022 is essential to understand the future trajectory of Philippine cryptocurrency policies. The Executive Order stipulated that, “Digital assets may pose significant illicit finance risks, including money laundering, cybercrime and ransomware, narcotics and human trafficking, and terrorism and proliferation financing.” It further emphasized six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. Dr. Alondra Nelson, the Director of the Office of Science and Technology Policy (OSTP) gives an optimistic tone to the potentials of the use of digital assets for the benefit of society. She cites three key takeaways on US cryptocurrency policy: 1) focus on the potential of digital assets in helping the unbanked population, 2) the risk of predation by the crypto industry on vulnerable populations, and 3) the environmental challenge posed by certain digital assets that require high levels of computing power. 

Overview of Cryptocurrency Companies in the Philippines

Cryptocurrency exchanges have been growing in the Philippines. In addition to the 11 operators registered by the Bangko Sentral ng Pilipinas (BSP), there are 37 crypto exchange operators licensed by the Cagayan Economic Zone Authority (CEZA). (See Table 1: BSP-Approved Cryptocurrency Exchanges). These operators are registered under the Remittance and Transfer Companies with Money Changing or Foreign Exchange Dealing and Offshore Virtual Currency Exchange (OVCE) Service. The CEZA has issued two types of licenses: 24 companies received the Offshore Virtual Currency Exchange (OVCE) Principal License and 13 companies received the OVCE Regular license. The former licensees are allowed to conduct offshore financial technology and cryptocurrency exchange activities while the latter license only permit licensees to conduct offshore crypto exchange activities.

In the Philippines, cryptocurrency has a strong customer uptake. According to BSP Governor Benjamin Diokno, the volume of transactions involving virtual assets grew 362% year on year to nearly 20 million in June 2021. These transactions were worth P105.93 billion in June, up 71% over the same period. This pattern can be sustained due to increasing interest by the Philippine art and media sector to pay for art works using Non-Fungible Tokens (NFTs). A non-fungible token (NFT) is a unique digital code stored on a blockchain, a form of distributed or digital ledger. Non-fungible tokens represent rights to the particular asset. The term “non-fungible” distinguishes NFTs from other digital assets that are fungible or interchangeable, such as bitcoin.

Table 1: BSP-Approved Cryptocurrency Exchanges

The NFTs provide an ability to authenticate virtually anything where there is a need to establish authenticity and ownership. Their popularity has centered on the art and collectibles world. Based on a survey to gauge the Filipino youth perspective on cryptocurrencies, there were three key observations: 1) The number of consumers who are highly aware of the presence of cryptocurrency is still much to be desired; 2) Cryptocurrency is positively viewed as a potential medium of exchange but there is still much skepticism for it to be positively accepted to function as an investment vehicle primarily due to its volatility, and 3) The  attitude towards cryptocurrency and level of awareness significantly influence an individual’s willingness to adopt cryptocurrency.

Several companies have even offered cryptocurrency games. Axie Infinity which is created by Skymavis allows players to earn NFTs and cryptocurrencies by breeding, battling and trading digital pets called Axies. These online games allow creation of money or other rewards and players can exchange real money for game currencies, also known as digital or virtual currencies. Notably, such games have gained attention as they presented Filipinos with an opportunity to earn during the pandemic. There are semblance of safeguards in place to protect players. For example, the Securities and Exchange Commission (SEC) issued an advisory against Pogi Breeds, a company that claims to use people’s money in buying and breeding Axies and in playing Axie Infinity in 2021.

The strong optimism in crypto trading also led the Union Bank of the Philippines (UBP) to launch a trading platform. UBP bank officials estimated that an average Filipino investor will likely hold 3% to 5% of their personal assets in digital assets like Bitcoin in the next five years assuming markets are “stable,” up from around 1% to 2% now.

The Panorama of Government Regulations

The primordial hurdle for regulators is to balance innovation with the integrity of financial markets and customer protection. The existing regulations carefully nurture innovation, while also guiding it to be responsible. In the Philippines, there are two government regulatory agencies focusing on the cryptocurrency industry: 1) BSP or Central Bank and 2) SEC. BSP adopted a regulatory approach to cryptocurrency through the issuance of Circular No. 944 dated February 7, 2017. This circular requires businesses in the exchange of cryptocurrencies for fiat money in the Philippines to register with the BSP as remittance and transfer companies.

BSP also issued Circular No. 1105, series of 2020, or the Guidelines for the Establishment of Digital Banks. This circular recognized digital banking institutions that can operate and deploy their banking products and services via fully digital platforms. Additionally, the circular stated that only banks granted a license to operate as digital banks may claim and represent themselves as a digital bank. In addition to the minimum capital requirement of PHP1 billion for digital banks, a digital bank license application goes through these stages: (1) the application for approval to establish a new bank; (2) the application for the issuance of a certificate of authority (COA) to register with the Philippine Securities and Exchange Commission; and (3) the application for the issuance of the COA to operate as a digital bank. Prior to the issuance of circular No. 1105, digital banking in the Philippines was deployed by traditional BSP-licensed banks through electronic banking services and operations, as regulated under BSP’s Manual of Regulations for Banks (MORB). Under MORB, banks that plan to offer or enhance existing electronic banking services must submit an application to BSP, describing the services to offer or enhance, and how it fits in the bank’s overall strategy. The application must be accompanied by a certification signed by its president that the bank has complied with BSP’s minimum pre-conditions.

BSP circular No. 649, series of 2009 defined electronic money as a monetary value represented by a claim on its issuer, that is: (1) electronically stored in an instrument or device; (2) issued against receipt of funds of an amount not lesser in value than the monetary value issued; (3) accepted as a means of payment by persons or entities other than the issuer; (4) withdrawable in cash or cash equivalent; and (5) issued pursuant to other guidelines of BSP circular No. 649. Further, BSP stipulated that Electronic Money Issuers (EMIs) can be in the form of EMI banks, non-bank financial institutions, or non-bank institutions registered as a money transfer agent. The electronic money which is issued by banks shall not be considered as deposits as they can only be redeemed at face value, which shall not earn interest, rewards and other similar incentives. BSP has issued a draft amendment to the EMI Regulations for public comment, which allows banks to offer electronic money services subject to BSP’s approval under an electronic payment and financial services (EPFS) Type A license, and compliance with prudential criteria provided under MORB. The draft provided classifications between a large versus small-scale EMI bank. Large-scale EMI banks must have a 12-month average value of aggregated inflow and outflow transactions equal to or greater than PHP25 billion (USD478 million). Otherwise, it shall be classified as a small-scale EMI bank. In terms of capitalization, the large-scale EMI banks require at least PHP200 million; the small-scale EMI bank requires at least PHP100 million.

Another important regulation is BSP circular No. 1033, series of 2019, which states that the Electronic Payment and Financial Services (EPFS) license generally applies across all BSP-supervised financial institutions seeking to provide electronic payment and financial services. The EPFS is an inherent part of EMI and digital banking where the requirements are embedded within EMI and digital bank application processes.

Additionally, under SEC’s Rules on Digital Asset Exchange, Section 8 establishes the Mandatory provisions in Digital Asset Exchange Operational Framework. Further, SEC issued Memorandum Circular No. 19, Series of 2019 to require financing and lending companies to register their online lending platforms. Pertaining compliance, SEC also released a Warning Advisory on 14 unregistered companies which had been soliciting funds from the public in 2018.

Areas of Concern

The cryptocurrency industry while replete with opportunities, also carries with it significant risks. The industry has to establish technological solutions to operationalize new compliance standards and establish appropriate Know Your Customer (KYC), due diligence and reporting procedures. The Wire Transfer Rule, also called the ‘Travel Rule’, requires states to take precautions to ensure that Virtual Asset Service Providers (VASPs) monitor and share customer data among themselves and with the relevant government authorities.

A second area of concern is the cybersecurity risk. There is a need for a coherent approach to the regulation and oversight of cryptocurrencies in terms of cybersecurity. The different levels of cybersecurity adoption by cryptocurrency companies need to be evaluated by government regulators to ensure if the cybersecurity in place is secure and safe in terms of personal data privacy protection. The increases in security breaches and digital surveillance highlight the need for improved privacy and security. For instance, an electronic system operator should respect the privacy of personal data and treat it as confidential. There is a need for BSP and SEC to appoint third party organizations to ensure that data privacy follows Republic Act 10173, known as the Data Privacy Act. This is a law that seeks to protect all forms of information, be it private, personal, or sensitive.

A third area of concern is the lack of an enabling law governing government oversight of this industry in terms of sanctions and remedy. The industry is growing at a phenomenal rate but there are no specific provisions for redress on the part of the customers. Moreover, since the industry is still evolving, there may be regulatory “grey areas” or possible misinterpretations of risk, regulation or compliance on the part of well-meaning government regulators. Additionally, for any disputes on cryptocurrency transactions, there are no clear guidelines on which specific government agency the consumers can file their cryptocurrency-related complaints. SEC has a penalty clause covering Digital Asset Exchanges in Section 82 which is classified as Prohibited Acts. Despite this penalty clause, there is a need for SEC to closely collaborate with Law Enforcement Agencies (LEAs) in order to arrest and prosecute the violators of these penalty provisions.

A fourth area of concern is consumer protection. The Republic Act 7394, otherwise known as the Consumer Act of the Philippines of 1991 is the legal basis for consumer protection in the country. The law embodies the state policy on the protection of consumers and establishes standards of conduct for business and industry in the country. However, this law was passed before the inception of the cryptocurrency industry. Therefore, there is a need to amend this law in order to include consumer protection in the financial technology and cryptocurrency industries. Consumer protection providers should incorporate transparency, impartial treatment, trustworthiness, privacy and safety of customer data and information, and simple treatment of complaints and customer disagreement resolution into their operations, along with fast and inexpensive charges. Currently, BSP regularly publishes information about registered cryptocurrency companies and Digital Asset Exchange companies and it encourages customers to only deal with them. BSP also publishes warnings including those on bitcoins.

The fifth area of concern focuses on inheritance issues. It is unclear how this asset can be passed on to one’s heirs. Another serious area of concern is the use of cryptocurrency for terrorism funding.

Two Lacunas

While the conversion of cryptocurrency to fiat money is regulated by BSP, authorities may find it difficult to pinpoint individuals involved in the transaction as PhilSys – the Filipino Identification System – has not reached 100% registration for all Filipino citizens. Moreover, the SIM Registration Law was vetoed by President Rodrigo Duterte last month due to serious freedom of expression concerns.  Several senators inserted in the draft bill at the last minute requiring the mandatory registration of all social media accounts of each citizen. Additionally, the continued proliferation of prepaid mobile SIM numbers makes it difficult for law enforcement officials to closely monitor transactions including cryptocurrency transactions. Collectively, these two lacunas provide terrorists with enough room to exploit cryptocurrencies for terrorism financing purposes. The Philippines is on the Financial Action Task Force (FATF’s) grey list due to “strategic deficiencies” in its money laundering and terrorism financing system. A terrorist-linked money laundering operation involving cryptocurrencies generated funds, which were then allegedly used to finance the activities of terror networks operating in the conflict-ridden Mindanao region in the southern Philippines.

In the context of the socio-political environment, several concerns were highlighted. Since privacy and anonymity is guaranteed by the cryptocurrency, it may be useful for illicit purposes by transnational organized crime groups. Terrorists and criminals are highly resourceful and will find ways to commit crimes. Major thefts have occurred (the bitcoin-exchanges of Mt. Gox35,), illicit transactions have occurred (the bitcoin-marketplace of Silk Road38 where people can buy and sell narcotics and other illicit items), fraudulent practices by specialized computer hardware manufacturer (the manufacturer Butterfly Labs39) have occurred. However, it is not clear at all that these crimes would not have occurred if there were no cryptocurrencies.

Another serious concern is that cryptocurrencies make arbitration and adjudication of disputes between transacting parties difficult, if not nearly impossible. Where should one go and to whom should one complain? There is a need to carry out an extensive education for law enforcement and prosecution officials on cryptocurrency trading and investments. In fact, there is a need for a dedicated Philippine National Police unit focusing on crime-related cryptocurrency transactions.

International Coordination

An ASEAN Cryptocurrency policy has yet to be crafted. Due to the lack of standardization of cryptocurrency regulations, the acceptance of cryptocurrency as legal tender varies greatly in Southeast Asia. Cambodia has integrated blockchain into their public goods system. Singapore hosts successful cryptocurrency start-ups while Malaysia has a thriving cryptocurrency sector. In Indonesia, the government is applying tax on digital transactions starting May 2022 including cryptocurrency. However, in Muslim-majority Indonesia, there are factions against cryptocurrencies. The National Ulema Council, or MUI, has deemed cryptocurrency as haram, or not permissible, as it has elements of uncertainty, wagering and harm. MUI asserts that if cryptocurrency as a commodity or digital asset can abide by Shariah tenets and can show a clear benefit, only then can it be traded.

Challenges remain in terms of inter-country law enforcement cooperation and enforcement actions. The standardization of cryptocurrency policies within Southeast Asia and the process of enhancing the understanding of law enforcement officials about the workings of this industry need to be improved. Due to cryptocurrency’s fast-moving and innovative technology, products and solutions, law enforcement officials need to acquire new skill sets to keep pace with the knowledge requirements for risk and compliance functions.

The Philippine regulatory authorities aim to achieve the broader goals of fostering financial inclusion, promoting competition and delivering better outcomes for society. These goals are also pertinent to the cryptocurrency industry. Nevertheless, trust is needed to maintain the societal conventions regarding the use of money. The regulatory authorities need to provide, an open, neutral, trusted and stable platform. The level of regulatory oversight and investor transparency at these venues has not matched similar platforms for corporate bonds or equity securities. Additionally, there is a need for a clear disclosure requirement to cryptocurrency companies in order to warn customers of the risk of loss.

Conclusion

It is in the interest of Philippine regulatory authorities to allow the cryptocurrency sector to continue its phenomenal growth in the absence of a 100% uptake on the National ID and the SIM card law regulating SIM card use for personal mobile phones. Without the full enforcement of these important strategic policies, targeting strict regulations for the cryptocurrency sector will simply lead to unintended policy consequences: interfering in seamless payments and lending systems; hampering income revenues from cryptocurrency investments and trading; and, crippling the thriving Philippine art and music sectors which have benefited from different NFTs.

Cognizant of the risks of AML and CFT, it is also essential to increase the expertise and technical capabilities available to Philippine regulatory authorities so that AML/CFT is reduced or completely eliminated. The regulatory authorities can work on the development of Public-Private Partnerships in cryptocurrency transactions. The Philippine government can also implement the upgrading of prosecutorial and law enforcement expertise and capacity with the purview of enforcing regulations in the medium-term. Government regulators must also pay attention to the monitoring of new cryptocurrency players and the testing of emerging industry procedures to faithfully comply with FATF rules. Finally, regulatory authorities, LEAs and cryptocurrency companies should consult each other and develop typologies and indicators for terrorist financing methodologies and potential asset storage operations in the field of crypto transactions.

Introduction

At the national level, Malaysia continues to reject the incorporation of cryptocurrency into its financial system. Responding to a parliamentarian question,  Deputy Finance Minister II, YB Yamani Hafez Musa, stated that cryptocurrencies are still not recognized as legal tender in Malaysia as they do not exhibit characteristics of universal money. Malaysia’s Deputy Minister of Communications and Multimedia had even proposed recognizing Bitcoin as a legal tender, making Malaysia to be the second in the world to recognize Bitcoin as legal tender. But, again, Deputy Finance Minister I, Dato’ Indera Mohd Shahar Abdullah, answered that the country has no intention of recognizing cryptocurrencies as legal tender.  

Among its citizens, cryptocurrency is gaining attention, particularly after the Security Commission (SC) recognized it in 2019, allowing Malaysians to legally own cryptocurrency as digital assets. Recognized as a security and commodity, it is regulated by the Capital Markets And Services (Prescription Of Securities) (Digital Currency And Digital Token) Order 2019 under the Capital Markets And Services Act 2007. Additionally, several companies have been approved as recognized market operators, such as Luno, MX Global, SINEGY Technologies, and Tokenize Technology. From 2020 to 2021, the trading value of cryptocurrencies in Malaysia exceeded RM16 billion, increasing more than 562% compared to the previous corresponding period. Based on the increasing popularity, this article attempts to provide insights into the concerns associated with cryptocurrencies and considerations for their adoption at the federal level.

How Cryptocurrencies Work?

Cryptocurrency, digital coin, digital currency, virtual currency, e-wallet, and digital wallet are usually used interchangeably. However, these terminologies are technically different in their definition and underlying technology. Cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), to mention a few, are decentralized digital coins that have a stored-value developed on blockchain technology. Unlike digital currency, which the central bank usually controls, cryptocurrency has no issuing or regulatory authority that governs it. Instead, buying and selling cryptocurrency requires an electronic or digital wallet to store the coin’s value. It works similarly to platforms Malaysians are au fait with, such as Touch ‘n Go eWallet, GrabPay, Boost, Maybank E-Wallet (MAE), Shoppee Pay, and Lazada Wallet. These platforms, easily installed on smartphones, enable users to store money in their e-wallet for payment at physical stores or online shopping.

Additionally, cryptocurrencies like Bitcoin are online payment systems that allow electronic cash to be sent directly on a peer-to-peer basis without going through financial institutions. Although cryptocurrencies have all the currency features, it is unlike a fiat currency issued and controlled by a central bank. Instead, it is a decentralized system in which anyone with computer processing capabilities can connect to the network and self-create cryptocurrency. This process is called “mining”, which runs on blockchain technology. Notably, blockchain technology is not solely for cryptocurrency and has been developed for other applications like distributed ledgers and smart contracts. Briefly, blockchain technology is a distributed database or public ledger that contain records of all transactions which shared with all participating parties. Every transaction in the public ledger is verified with the consensus of the participating parties. This feature makes blockchain or cryptocurrency secure and has immutable records.

The primary blockchain concept for cryptocurrencies like Bitcoin is straightforward. First, when a new transaction is initiated, it will be broadcasted to all miners (also known as nodes). Miners are computer nodes that share their computing resources to verify a transaction and generate a block, and they are awarded Bitcoin units for their contributions. When it was launched, a miner received 50 units of Bitcoin for every new block created; however, up until May 2020, the reward had reduced in which a miner received only 6.25 Bitcoin units for every new block created. Each miner will find proof-of-work for that transaction, an answer, or a mathematical puzzle solution when a new block is created. The first miner who can provide work proof will broadcast the block to the network, while the other miners will verify it. The process will be repeated for a new transaction.

Three Concerns with Cryptocurrencies

Generally, decentralized cryptocurrencies are created to facilitate secure online transactions that cannot be altered and are permanently recorded in the public ledger. Many claim that cryptocurrencies are anonymous, but they are more accurately referred to as pseudonymous transactions. Anonymous means that the identity of a person who performs a particular transaction is unknown, while pseudonymous transaction means that the identity of a person who performs a transaction is known but it is concealed. The purpose of pseudonymity is to protect the privacy of individuals as part of human rights. When a person purchases or receives cryptocurrency, it requires an e-wallet to store the value and being assigned an alphanumeric address to receive and send the cryptocurrency. These addresses are an individual’s public key, which works in pair with a private key and is only known to the corresponding person. In the public ledger, the actual identity of a person sending or receiving the cryptocurrency is unknown; however, it can be traced. Such forensic tracing can uncover the real identities of these individuals. This has led to concerns of privacy leakage.

The private key that is paired with the public address is another concern for cryptocurrency owners. Public cryptography works using a pair of public and private keys and encrypts the information using a complex mathematical algorithm. It is part of the individual credential management akin to us managing our physical keys. However, unlike a physical key to access a door that may be replaced, the secret key is irreplaceable. The lost of such key will amount to a lost of access to the owner’s cryptocurrency. In other words, lost keys, including forgetting their details, equates to a loss of funds.

A third concern with cryptocurrency is the inability to “undo” transactions. Simply, successful transfers cannot be cancelled and set to return to their original state. This is unlike current financial systems which possess such transaction reversibility features to allow financial institutions to mitigate fraudulent activities. Therefore, cryptocurrency owners could also lose funds through theft and fraud with no avenues to seek assistance.

Towards Sustainable Cryptocurrencies

The sustainability of cryptocurrencies has been widely discussed in terms of ensuring that these assets can continue to exist in the long run with minimal impacts on the environment. Though cryptocurrencies may have high asset value, its mining incurs a large carbon footprint as it consumes massive energy and generation of electronic waste. Bitcoin mining, for example, uses specialized, high-powered computers and enormous computing power in solving complex puzzles to unlock Bitcoin transactions. Energy consumption for Bitcoin mining is estimated to be more than the usage of every refrigerator in the US. It also equates to almost the same energy consumption in global copper mining. Recently, more sustainable and green cryptocurrency mining models have emerged, such as SolarCoin, Algorand, and BitGreen.

These new platforms present a good start towards sustainable cryptocurrencies but initiatives to adopting them have yet to start in Malaysia. It is, thus, imperative for Malaysia to consider facilitating cryptocurrency mining using renewable energy especially if there is interest to increase the roles of cryptocurrencies in the country’s financial system. In addition to requiring collaborations between government agencies and industry players, initiatives such as creating of awareness and provision of incentives would assist in their adoption in Malaysia. 

In light of continued preference for traditional cryptocurrencies in Malaysia, an added issue is mining by illegally tapping electrical supplies. Tenaga National (the national electricity provider) reported many cases of illegal electricity connections for cryptocurrency mining in Malaysia. Consequently, the significant increase in electricity consumption amounts to income losses estimated at $550 million from 2018 to 2021. To address this issue, Tenaga National proposed a new tariff for cryptocurrency mining operators and required them to apply for legal electricity supply.

Another sustainability aspect of cryptocurrency lies in asset inheritance. As the number of people owning digital assets with financial value is growing, there is an urgent need to bridge the gaps in handling the assets within estate planning. Importantly, how should cryptocurrency be distributed to the legal heirs upon the owner’s demise? Moreover, how can digital assets, particularly cryptocurrency, be planned and managed with Malaysia’s existing estate planning and management framework? Unfortunately, no country has a specific guideline or law that Malaysia can follow and replicate in terms of estate planning governance and regulation of crypto assets. Additionally, the nature of cryptocurrencies makes it difficult for inheritance. For example, private keys to access crypto assets are secret. Therefore, private keys are bound to disappear if the owners fail to make provisions for their heirs. The situation is even more complex if heirs do not know the existence of these assets. These assets do not vanish, but they often become inaccessible when the owners die. Therefore, in a sudden death with an unplanned estate, there is no way for cryptocurrencies to be retrieved, leading to uncounted assets for distribution to the heirs.

This demonstrates a need to form a sustainable estate planning system, especially one capable of protecting cryptocurrency so that heirs can inherit it just like any other type of asset. Cryptocurrency estate planning unites experts from multiple disciplinaries, including estate planning, computing, and legal. It might also involve cryptocurrency market operators for the possibility of internal mechanisms to support the estate planning from the beginning until the distribution to the heirs after the clients’ death.

CBDC as a Way Forward for Malaysia

The adoption of cryptocurrency in Malaysia is expected to grow exponentially among its citizen. However, its adoption at the federal level is unlikely in the near future. Based on the government’s current stance, it is clear that a decentralized cryptocurrency would remain as a security and would not be approved or accepted as legal tender or means of transactions between Malaysia and other countries. This stance is reinfored by the fact that decentralized cryptocurrency could lead to inappropriate use, including crimes. For example, cryptocurrency was demanded in online ransomware attacks like NetWalker. Further, there is also a potential increase in money laundering activities and scams related to cryptocurrency i.e. an increase in “white-collar crimes.” It may also be used for terrorism financing and human trafficking. Extensive use of decentralized cryptocurrency could also lead to cyrptojacking attacks where computing resources are hijacked and used to mine cryptocurrency.

Malaysia has considered adopting the central bank digital currency (CBDC), a digital version of a country’s fiat money and deemed to be better than decentralized cryptocurrency. By March 27, 2022, nine countries have launched their CBDC, with more countries expected to launch their CBDC. Malaysia has joined Dunbar, a project led by the Bank for International Settlements (BIS) Innovation Hub with Australia, Singapore, and South Africa to test a common platform for multiple CBDC. The project aims to enable cheaper, faster and safer cross-border payments using CBDC. What is currently required in  the Dunbar project is the development of mechanisms for smooth technical communication between these multi-CBDC, including the formulation of governance and policies. Currently, cross-border transfer in Malaysia is solely dependent on Society for Worldwide Interbank Financial Telecommunications (SWIFT) banking system. Over decades, it provides secure and efficient communication between member institutions. However, the recent sanctions on Russian banks encourage countries to seek alternative systems for cross-border transactions. Many countries have taken immediate actions resulting from this sanction. For example, in the US, President Biden had released an executive order to several federal agencies to study cryptocurrencies and prepare the groundwork for a potential digital dollar; a new currency. Similarly, Bank of England worked with the Massachusetts Institute of Technology to study the digital pound. Collectively, these provide further impetus for Malaysia to adopt CBDC.