Digital Currencies & the Payments Ecosystem – Sector Overview & Growth Outlook

Could you outline the landscape for digital currencies as it relates to the payments ecosystem from a geographic and use case sense? Where are we seeing the most interest, adoption, innovation and funding?

You mentioned the adoption of Bitcoin as a legal tender in economies such as El Salvador. How does the discussion on the digital currencies change with regard to adoption from developed and emerging markets? I know there’s been most of the serious innovation in digital currencies, maybe particularly central bank digital currencies, in developed markets such as China, but it seems developing markets that have probably experienced histories of fluctuation in their own local currencies would be more willing to adopt these as a payment method. Where do you see the conversation changing between developed and emerging markets? Do you think full-scale adoption would occur from one end and then trickle into the other?

How should we think about full-scale adoption of CBDCs [central bank digital currencies] and that impacting the dispensation of monetary policy? There’s a lot of published research on different aspects of CBDC, but this seems to be a big remaining question mark around their adoption and implementation in economies around the world.

Understanding the structure of CBDC adoption would have to be accounts that are made on the Federal Reserve ledger, does that negate the idea of decentralised finance that a lot of evangelists have been touting? If a CBDC is fully adopted and the accounts are existing with the Fed itself, then it’s a centralised, regulated account, is it not?

Evangelists often tout the idea of instant settlement for cross-border payments through digital currencies as a legitimate challenge to payment networks. Is this a legitimate challenge? Can innovation really narrow this gap, and how significant a competitive advantage are the 24/7 trading hours of digital currencies with regard to the limited trading hours for cross-currency FX swaps?

Where does digital currency adoption fit in the B2B payment space? This area is traditionally a little more nascent than the consumer side in terms of technology adoption and digitisation, so is there any specific sub-segment or use case within B2B payments that you see as a little more ripe for adoption?

I’ve heard anecdotally the possibility for implementation in automation of AR [accounts receivable] and AP [accounts payable] systems, where that instant settlement angle or easy facilitation of payments from an AP or AR would then benefit businesses on both sides by increasing access to working capital without any lag time. Do you see any merit to that take or what is your opinion on it?

I saw some estimates that by 2025, digital currencies could capture around 3% of total retail sales, including both physical retail and e-commerce. Is that realistic or can you unpack some of the challenges from a merchant and consumer side to achieving this penetration? I know Stripe has already advertised alternative payment methods through crypto, but then we have other e-commerce and commerce players such as Adyen saying it has no interest in implementing any digital currency or cryptocurrency payment method. Where do you see the sentiment and where do you see a realistic level of adoption?

How should we think about competition interchange fees between traditional card networks and digital currency adoption? Another main point touted by evangelists with regard to being faster is also being cheaper around interchange fees from the traditional credit and debit networks.

We’ve talked a lot about regulatory constrictions to digital currency adoption. What does a mature regulatory framework for digital currencies look like? What aspects of existing policies for payment networks can be borrowed and implemented? Where are those policies lacking?