Cryptocurrencies conquer cross-border payments: game changer in sight!

Cryptocurrencies conquer cross-border payments: game changer in sight!

A recent report from the Bank for International Settlements (BIS) shows that cryptocurrencies are playing an increasingly dominant role in cross-border payment transactions. According to the report published on May 8, the total volume of these payments was around $600 billion in the second quarter of 2024. These numbers show that Bitcoin (BTC), Ethereum (ETH), USDt (USDT) and USDC are significant players in this environment, as speculation and global financial conditions are the main drivers of cryptocurrency flows. The BIS notes that geographical barriers to cryptocurrency transactions are significantly lower than in the traditional financial system, making these digital currencies particularly attractive.

A key factor behind the rise in cryptocurrency usage is dissatisfaction with the high transfer fees charged by traditional financial institutions. These fees, combined with long processing times and regulatory hurdles, are causing users to increasingly look for alternative payment methods. Stablecoins such as USDC and USDT have proven themselves thanks to their extensive stability and are becoming increasingly popular as a transaction medium. Furthermore, cryptocurrencies have also established themselves as a practical solution in times of fiat inflation, as the BIS points out.

Growing influence of stablecoins and Bitcoin

The BIS further reports that the use of low-value Bitcoin transactions is increasing compared to traditional payment methods. This could indicate that users are looking for alternative payment methods. More and more Americans and Brits are using cryptocurrencies; Bitcoin and USDC account for 20% of cross-border payments, while ETH accounts for almost 30%. Countries like Russia and Turkey also see significant USDT usage, with over 12% of cross-border transactions.

The growing acceptance of digital payment methods among the general public is also being boosted by financial institutions investing in technologies such as stablecoins and tokenization. Vendors like PayPal and Stripe are actively exploring integrating digital currencies into their offerings, highlighting the potential of these technologies to modernize financial services. At the same time, however, the volatility of cryptocurrencies such as Bitcoin and Ethereum remains a critical issue that could limit their use by financial institutions.

Risks and challenges

In the context of the increasing use of cryptocurrencies, the BIS warns that the number of investors as well as capital in this sector has reached a critical mass, which could pose a potential threat to financial stability. Crypto-specific risks and increased public awareness are key factors influencing cryptocurrency investment flows. The need for further research into global crypto flows is also emphasized to better identify systemic risks.

The BIS highlights that policy measures aimed at curbing traditional payment flows could have limited impact on cross-border crypto activity. The interaction between crypto assets and the traditional financial sector is thus becoming increasingly relevant, highlighting the importance of developing a regulatory framework to control risk. Cointelegraph and News Crypto In their reports, they comprehensively examine the dynamic developments in the area of ​​cryptocurrencies and their influence on international payment transactions.