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Insights and Expertise

Crypto: The key to new

efficiencies in payments

Regulators now accept crypto as legitimate assets
A big part of why crypto winter is thawing is that
regulators are now warming up to crypto as legitimate
financial assets, following the January 2024 SEC approval
of spot Bitcoin ETFs (and likely Ethereum ETFs to follow
suit). Now, some European regulators are set to follow the
United States' example and legitimize crypto-based ETFs.

This reassures investors that they can engage with crypto
as a legitimate investment, and avoid the unregulated
crypto exchanges like FTX that damaged confidence in
the sector. It's clear that regulatory acceptance will be
the catalyst for Bitcoin to become an accepted means of
By Edgar Murans monetary exchange.
Clear Junction
Furthermore, the approval of spot Bitcoin ETFs recognizes
he "crypto winter" is thawing as lingering the inherent differences of blockchain-based instruments
skepticism gives way to optimism, but many from other assets, and why they require more tailored
financial institutions still think of crypto as a regulatory frameworks in response. With the advent of
T dirty word, and a volatile risk obliterating any the EU's MiCA regulatory framework assuring clarity and
potential reward. Attitudes need to change—fast. In this safeguards for crypto asset buyers, regulators in other
article, I'll outline how improving regulatory frameworks markets will learn and shape their own crypto strategies
for crypto can create the foundation for crypto to enter the accordingly.
financial mainstream.
I'm encouraged by the Bank of England’s steps to explore
Bitcoin and other cryptocurrencies have become bywords the viability of a digital pound, and other central bank
for volatility and catastrophic market fallouts. The collapse digital currency (CBDC) initiatives rolling out elsewhere.
of FTX seemed to exemplify every negative connotation CBDCs as a store of value and means of exchange are
around crypto: dubious asset value, unpredictable price as close as possible to fiat without being fiat. They also
swings, loss of customer funds, and nefarious players have the security advantage of being issued by a central
obfuscating the truth. government with a fixed value.

It's no wonder that so many financial institutions remain Blockchain's transformational benefits are clearly
hyper-cautious about engaging with crypto, a fear illustrated when moved from abstract concepts and
heightened by no clear regulatory oversight—until now. viewed through the lens of real-world applications like
cross-border payments, which are hampered by high costs
Consumer and business appetite for crypto is growing. and long settlement timeframes.
Boston Consulting Group predicted nearly 1 billion
cryptocurrency users by 2027 (see https://bit.ly/3zCyljl) and Blockchain offers real-time settlement and removes the
accepted usage of crypto-linked debit cards and other intermediaries that add to fees and risks. Transparency
initiatives by the likes of Visa and PayPal indicate market and trust are built in; every blockchain transaction is
demand is there (see https://bit.ly/3W3fTHT). traceable and recorded on a shared ledger.

But many financial institutions are missing out on Blockchain holds the potential to fundamentally transform
these customers, perceiving crypto as too high risk. remittance flows to underserved and emerging markets,
This reluctance now looks increasingly misplaced. empowering more financial inclusion and economic
Why? Because the rapid digitization of the global development at societal and global levels.
economy (including the rollout of real-time payments)
is spurring demand for faster, more secure ways to pay, The most likely form of blockchain able to fulfill this
across multiple use cases. Thus, we're on the verge of an potential are stablecoins, pegged to a reserve asset
enormous kickstart of crypto as an approved and trusted like U.S. dollars, which can act as a bridge between
way of making payments. cryptocurrencies and fiat currency.

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