It may still be an emerging technology, but businesses worldwide have already begun to explore how to use blockchain tech and cryptocurrencies in support of payments and cross-border trade.
Yet, new data shows that the uncertainty over how regulators view crypto across may keep it from gaining scale until there is more clarity.
Need for a Breakthrough
New findings from PYMNTS show that a collective view among businesses, financial institutions and regulators is needed to accelerate the use cases for which blockchain tech and payments may provide a comparative advantage to the status quo.
According to Cryptocurrency, Blockchain, and Global Business research by PYMNTS, 58% of the 250 multinational companies surveyed use at least one form of cryptocurrency, and 56% use blockchain technology.
Bitcoin is the most prevalent cryptocurrency, with 31% of firms using it for financial transactions, while another 29% use stablecoins and 24% use ether. Blockchain-based applications like smart contracts are equally compelling as they provide efficiency in coordination between exporters and importers through the automation of agreements, business events and other manually intensive processes that are also ripe for duplication.
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What Was That?
Not surprisingly, financial institutions (FIs) have taken notice of these trends: 93% believe that their corporates would use cryptocurrencies for both investing and transacting. To aid the pattern, three-quarters of the financial institutions in the U.S. plan to roll out cryptocurrency and blockchain-based services over the next 12 months.
In the exploding realm of cryptocurrencies, “stablecoin” emerges as a new line of financial products to attract traders, investors, and regulators alike. Stablecoins are cryptocurrencies backed by a set cash value or a reserve asset, such as the U.S. dollar. Data show 28% of the global businesses use digital currencies like USD coin (USDC).
However, there are discrepancies in trends between financial institutions and blockchain-based technologies. PYMNTS’s research reveals that many FIs lack a clear strategic understanding for bringing such services to market. Many admit to not fully understanding the technologies themselves.
PYMNTS research found that 43% of the multinational businesses and 26% of FIs cite regulatory matters as a barrier to integrating blockchain services into their business payments modernization roadmaps.
Differing Views
To be sure, the use of crypto for conducting business presents a host of opportunities as well as an array of challenges, and as with any change, there are unknown dangers and strong incentives that need to be balanced.
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Differing Views
Circle, a global financial technology firm, has developed working partnerships with regulators, paying close attention to guidance from the U.S. Securities and Exchange Commission (SEC). Circle’s crypto-trading desk provides one of the largest global liquidity pools for digital asset trading, averaging $2 billion in monthly volume. Jeremy Allaire, CEO of Circle, believes that the regulations are appropriate and will evolve as technology and innovation integrate into the economic and financial systems.
“As something like this gets so big — naturally, whether you’re the Federal Reserve, the U.S. Treasury Department or other federal-level agencies — the question arises whether this will ultimately be something that’s supervised just like other banking activities,” Allaire told PYMNTS.
He believes that the market is rapidly growing, and the advancement of this technology represents numerous breakthroughs in terms of payment efficiency, business model innovation, and transformation in economic infrastructure. End-users, businesses, and markets are projected to continue adapting this technology, and it will be interesting to see how this trend fits and grows in today’s broader supervisory framework.
“The velocity of this growth will move it from an academic discussion to a practical discussion,” Allaire told PYMNTS.
