Cryptocurrencies can be a good alternative to traditional settlement processes as they are based on blockchain technology, which allows transactions to be completed instantly without the involvement of intermediaries, according to a new report. Some players in the cross-border money transfer industry are seeing blockchain and cryptocurrencies as technologies that can improve money transfer processes.
Cryptocurrencies Eliminate Costly Practices for Remittance Providers
Using cryptocurrencies to settle transactions can be a useful “alternative to traditional settlement processes.” report This is reported by the International Association of Money Transfer Networks (IAMTN). According to the report, this is because in blockchain, the technology behind cryptocurrencies, transactions are instantaneous, without the need to go through intermediaries such as correspondent banks.
The combination of deteriorating correspondent banking relationships and the growing volume of cross-border transactions further highlights the importance of blockchain not only to reduce the cost of transferring funds, but also to significantly speed up the transfer of money across borders.
“International transactions can be completed almost instantly, eliminating the need to pre-fund accounts in recipient countries, a costly practice for remittance providers. A range of businesses, from traditional money transfer service providers to cryptocurrency fintechs, are using blockchain technology to improve money transfer processes,” the report explains.
To support this claim, the report includes the results of an IAMTN study that examined industry opinions on innovative technologies that could improve the process of sending funds across borders. As the results show, both blockchain and cryptocurrencies are seen as innovations that “bring [an] an endless number of opportunities in the field of cross-border payments.
Open application programming interface (API) and artificial intelligence (AI) are two other technologies that are thought to improve the money transfer process, according to an IAMTN study. In addition to revolutionizing the financial industry, many of these new technologies have the potential to “permanently improve cross-border payment infrastructure for the benefit of end users.”
Regulatory Uncertainty Slows the Adoption of New Technologies
However, the report states that money transfer service providers that seek to integrate new technologies into their operations often face challenges in the form of rigid national regulations or the absence of any laws governing such technologies. According to IAMTN, the fact that only a few countries regulate the use of blockchain creates “some level of uncertainty for businesses that use or would like to use this technology.”
The report also states that barriers such as accessibility, lack of awareness, literacy and trust often work against new technologies or make them unattractive, even if their use results in significant savings. Therefore, to overcome some of these challenges, the IAMTN encourages policy makers to adapt their decisions to these realities.
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Credit : news.bitcoin.com