• Edgar Murans, Senior Sales Manager at Clear Junction


• 28.08.2024 12:45 pm
#PaymentEfficiencies #CryptoInnovation

As ‘Crypto Winter’ thaws, many financial institutions are still hesitating to engage with the many practical uses of crypto and blockchain technology in payments. It’s no surprise that Bitcoin and other cryptocurrencies became synonymous with wild market speculation and unregulated exchanges like FTX, so it’s understandable that financial institutions are extra-cautious about engaging with crypto in any form. 

But the fact is that consumer appetite is growing – and financial institutions ignore that demand at their peril. According to Boston Consulting Group, there will be nearly one billion cryptocurrency users by 2027, and the launch of crypto-linked debit cards and other initiatives by the likes of Visa and PayPal indicate strong market demand for more crypto use cases.

That’s why I think crypto is on the verge of becoming a trusted way of making payments.

Regulators pave the way for mainstream crypto acceptance

The January 2024 SEC approval of spot Bitcoin ETFs and the EU’s MiCA regulatory means that with this new regulatory oversight, retail and institutional investors can safely engage with crypto through authorised platforms and products with clear safeguards. 

Blockchain has real potential to transform cross-border payments that are currently hampered by high fees, intermediaries and long settlement timeframes. Blockchain’s real-time settlement eliminates the intermediaries that add to fees and settlement delays or risks, and it could transform remittance flows to underserved markets to empower more financial inclusion and economic growth.

That’s why I think stablecoins could be the game-changer for blockchain-based payments. Stablecoins pegged to a reserve asset like US dollars can act as a bridge between cryptocurrencies and fiat currency, providing a safe and decentralised way to facilitate payments without the volatility associated with other crypto forms. Stablecoins are already active in payment use cases, including a Visa pilot project sending USDC stablecoins to merchants through the Solana blockchain. Initiatives like these will further legitimise crypto as a payment instrument, used and trusted in the same way as bank account transfers and payment cards to buy goods and services.

Embrace regulation as an opportunity to innovate

With solid regulatory structures and risk management safeguards now in place, these will encourage financial and payment players to explore a wider range of innovative use cases for crypto. That in turn will lead to a surge in demand for fintech and payments companies with the built-in compliance capabilities to support them.  

In conclusion: the market dynamics, consumer and institution appetite, and regulatory guardrails all prove that crypto is here to stay. Any responsible financial business that wants to serve a global customer base should embrace crypto by building the proper infrastructures they’ll need to thrive in the new era of dynamic digital assets.