The Bank for International Settlements (BIS) reported that Bitcoin, Ether, and prominent stablecoins handled approximately $600 billion in cross-border payments during Q2 2024.
Key Forces Driving Digital Asset Usage
The report by BIS emphasized that speculation and broader global financing trends are the primary drivers behind the increased usage of digital assets. The study also noted that Circle’s USDC and Tether’s USDT stablecoins, along with low-value Bitcoin transactions, have become more prevalent in everyday cross-border transactions.
Crypto’s Dual Role
The report highlighted the dual nature of cryptocurrencies, serving as both an investment vehicle and a transaction mechanism. BIS pointed out that data indicates an increasing overlap between crypto assets used for speculation and traditional financial systems.
Crypto’s Potential in Cross-Border Payments
There has long been conjecture that cryptocurrencies could be an ideal solution for cross-border payments, given the challenges faced by these transactions such as payment delays, high fees, and regulatory constraints. Various solutions have emerged, including offerings from Visa and Mastercard, the global messaging network SWIFT, and a project initiated by BIS—involved central banks aiming to explore international payments systems.
Digital assets present a compelling alternative due to their decentralized nature and blockchain infrastructure, which facilitate immediate, transparent, and cost-effective transactions. However, volatility and concerns regarding fraud and security continue to deter some financial institutions from fully embracing digital assets.
Advancements in Digital Asset Adoption
Despite these challenges, the trend toward adopting digital assets has grown stronger over recent years. Stablecoins, in particular, have been key initiatives by major financial services firms like PayPal and Stripe. Even Meta has announced plans to launch its own stablecoin to support global operations.
The increased presence of digital assets within product offerings from more companies indicates a broader acceptance of cryptocurrency. However, these advancements bring new risks that need to be managed carefully.
Future Considerations
BIS acknowledged the ongoing need for research to understand global crypto flows and noted that policies designed to control traditional financial activities may have limited effectiveness in constraining cross-border crypto transactions. As cryptoassets integrate more deeply into mainstream finance, understanding systemic risks and potential market impacts will become crucial for policymakers and market participants.