The Bank for International Settlements (BIS) found that bitcoin, Ether, and the leading stablecoins facilitated roughly $600 billion in cross-border payments in Q2 2024.
The report highlighted that speculation and broader global financing trends are the main forces driving the use of digital assets. BIS also noted that Circle’s USDC and Tether’s USDT stablecoins—along with low-value bitcoin payments—have gained traction in everyday cross-border transactions.
Additionally, the study underscored the duality of crypto, which can operate as both an investment vehicle and a transaction mechanism. BIS noted that the data points to a growing overlap between crypto assets as speculative assets and traditional financial systems.
An Ideal Candidate
There has long been speculation that cryptocurrencies could be an ideal solution for cross-border payments. These transactions often face challenges ranging from payment delays and high fees to regulatory restrictions.
As a result, many potential solutions have cropped up, including offerings from Visa and Mastercard, global messaging network SWIFT, and even a project organized by BIS—a consortium of central banks focused on exploring international payments systems.
Digital assets present a compelling alternative for cross-border payments due to their decentralized nature and blockchain foundations, which enable transactions that are immediate, transparent, and cost-effective. However, the volatility of cryptocurrencies like bitcoin and Ether, coupled with concerns around fraud and security, has kept many financial institutions from adopting digital assets in earnest.
Moving Beyond Borders
This sentiment has changed over the past few years, as more institutions have invested in technologies like stablecoins and tokenization. Stablecoins have been the focus of many initiatives by leading financial services companies like PayPal and Stripe. Even Meta announced its plans to launch a stablecoin to facilitate its worldwide operations.
Although more companies are adding digital assets to their product offerings and crypto is more mainstream than ever, there are still risks to consider.
“Our assessment highlights a continuing need for future research to understand the dynamics of global crypto flows,” the BIS noted. “Our analysis indicates that policy measures designed to dampen traditional financial flows may have limited impact on constraining cross-border crypto activity.”
“Yet, as cryptoassets become more integrated with mainstream finance, understanding the systemic risks and potential contagion effects between these markets will be essential for policymakers and market participants alike.”
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