Smarter Faster Payments in New Orleans brought together representatives from the Federal Reserve Bank, Citizens, EPCOR, and Nacha to discuss the potential of blockchain for cross-border transactions and financial inclusion. This dialogue highlighted the importance of understanding digital assets amidst concerns about anonymity and regulatory uncertainty.
A key focus of the discussion was a recent report from Nacha Payments Innovation Alliance titled “Diving into the Fundamentals of Cryptocurrency as a Form of Digital Payment.” This report, informed by a survey of 63 individuals in the banking payments sector, indicated that while knowledge of cryptocurrencies stands at a moderate level of 5 out of 10, 90% of participants affirmed their organizations are engaged with cryptocurrencies or closed-loop digital currencies. However, banking institutions appear to rely on manual processes for identifying crypto activity, indicating a lack of sophistication in this area.
Sharon Hallmark from EPCOR shared a noteworthy statistic from the survey: 80% of respondents would not take on a client known to be processing cryptocurrency. The panel concluded that educational resources are critical for financial institutions, along with ongoing monitoring of regulatory developments, such as the FIT 21 Act and the Stablecoin Act.
James Maimone from Citizens Financial Group emphasized the complexities involved with processing payments in cryptocurrency, noting that concerns extend beyond simply sending money across borders. He argued for a focus on instant payment methods rather than anonymity-driven transactions.
Mark Dixon of Nacha Consulting acknowledged the anonymous nature of blockchain transactions but highlighted the transparency offered within the technology. He expressed optimism about interconnecting multiple blockchains to enhance speed and efficiency, while also noting a lack of interest in central bank digital currencies (CBDCs) in the U.S.
Chris Colson from the Federal Reserve Bank of Atlanta pointed out the current reluctance toward digital asset adoption, stressing the need for better education and user experience to encourage usage.
While Dixon recognized the potential for cryptocurrency and blockchain to facilitate transactions outside traditional banking systems, Maimone argued that true financial inclusion remains challenging. He believes many people who prefer cash budgeting methods may not see value in adopting digital currencies.
Colson added that programmable digital assets could restrict users’ access to their funds, contrasting with the flexibility of cash budgeting. Maimone raised concerns about consumer protections, questioning what happens if someone loses their crypto wallet password and underscoring the need for comprehensive guidance in navigating cryptocurrency.