The UK financial organisation considers crypto a “viable alternative” to conventional payments
Recent research concludes that cryptocurrencies may supplement conventional finance by serving as a “good alternative” to the current settlement methods.
According to research by the International Association of Money Transfer Networks (IAMTN), the blockchain technology that drives cryptocurrencies enables rapid remittances by removing middlemen such as banks and reducing transaction fees.
Notably, the results are supported by industry leaders questioned by IAMTN about novel technologies with the potential to enhance cross-border payments. Intriguingly, the stakeholders remarked that blockchain and cryptocurrencies provide “unlimited changes” to improve international settlement.
The use of cryptocurrencies for transaction settlement might be a viable alternative to conventional settlement procedures. According to the research, this is due to the ability to settle transactions quickly on a blockchain, bypassing the correspondent banking system with its limited operating hours and lengthy processing periods.
Motivations for blockchain in transactions
IAMTN claimed that the necessity to investigate blockchain technology is prompted by the decline in correspondent banking connections and the increase in the number of cross-border payments.
Despite the purported advantages of blockchain in payments, the ideal use case for the technology in remittance is still unclear, according to the research findings.
In addition to blockchain, the IAMTN has mentioned open application programming interface (API) and artificial intelligence (AI) as technologies that might improve international settlements.
It is also important to note that the survey highlighted that industry participants strive to adopt blockchain technology into their systems but have found several obstacles, legislation being the most significant. According to the study, some areas have rigorous regulations governing the incorporation of new technology, while others lack clear standards and confusion.
Compliance with rules may become expensive and difficult for financial institutions owing to the requirement to keep up with changing regulatory environments throughout the globe. Specifically, according to the paper, difficulties develop when regulations lag behind technology improvements.
Other obstacles include a lack of accessibility, understanding, literacy, and confidence in new technology, and the research urges politicians to expedite the regulation process to guarantee clarity in the sector.