This referenced piece is posted in The Daily Hodl and penned by an exec from the 2018 UK-based startup Mercuryo, which specializes in cryptocurrency payment solutions. The overall take is how crypto is becoming more mainstream, but of course not all cryptos are the same, and surely not in the case of x-border.
As we pointed out in recent member research on the space, there was a lot of activity during 2020 around making cryptos easier to buy, sell, and utilize for procurement, although pretty much used for this by consumers only, whereas businesses are more comfortable with keeping them as investment assets. There is also the rising tide of activity among central banks to create CBDCs, initially driven by the Libra currency initiative back in 2019.
‘Fast forward to 2020. Last year, we could have witnessed a paradigm shift towards digital asset adoption around the world. Instead of banning or restricting access to cryptocurrencies, governments worldwide have entered into a heated race to create central bank digital currencies (CBDCs)…. CBDCs are an excellent way to make the current, somewhat obsolete payment systems more efficient while granting governments control over their economies. And it looks like many central banks are exploring this area, including China, Sweden, Singapore, Estonia, Japan and the UK, as well as the Bahamas, which launched its digital sand dollar last October….By now, it has become clear that enterprises and national governments share different views about crypto compared to a few years ago . But is this enough for cryptocurrencies to reach mainstream adoption and allow Bitcoin to become the most significant asset for cross-border payments?’
As we have pointed out on these pages and in research, decentralized cryptos like Bitcoin carry a high degree of price volatility that make them unattractive as a means of business value exchange, given the risks involved for counterparties, and for banks represent another means for regulators to simply poke around.
Stable coins and CBDCs are tied to or represent a fiat currency therefore become a more viable means to more quickly conduct x-border transactions. But as regulators become more a part of the solution, the mainstreaming should continue to progress.
‘In the past few months, cryptocurrencies have experienced a rapid surge in interest from institutional and retail investors. Today, businesses hold over 6% of the circulating Bitcoin supply, with publicly-listed companies like MicroStrategy and Tesla keeping a part of their cash reserves in the cryptocurrency….I expect the crypto industry to go through a positive development in 2021 and beyond, considering their rising adoption. As investors become increasingly familiar with digital assets, the more money institutions will pour into this new asset class….When so many high-net-worth players enter the industry, regulators will feel the pressure to provide more clarity around crypto. As a result, we will eventually have a healthy, fast-growing and thriving digital asset space – and that’s when cryptocurrencies will reach mainstream adoption.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group