Near-instant settlements have long been a dream among cryptocurrency enthusiasts, but those high expectations are now finding their way into traditional finance, according to one analyst.
On this week's episode of Yahoo Finance Future Focus, Ashley Pope, chief product officer at BCB Group, talks about the near-instant settlement speeds featured in cryptocurrencies, and what the implications may be for so-called traditional finance.
Bob highlighted how blockchain technology is motivating traditional market players to adapt in order to meet evolving customer demands.
Read more: Live crypto prices
“The near-instantaneous speed of settlement expectations in crypto is spreading to traditional finance, and eventually, as we move to a world where value moves at the speed of the internet,” Pope said.
Settlement speeds: from seconds to days
Current bank transfers can range from being almost instantaneous via networks such as FPS in the UK, and FedNow in the US, to taking days to settle via the SWIFT network.
“Almost instant bank transfers are limited to certain countries and suffer from transaction amount caps. And with Visa, although payment acceptance is done within seconds and geographic coverage is broad, funds can take days to clear at the physical merchant,” Pope said.
Read more: What is a Bitcoin exchange-traded fund (ETF) and why has it sparked a rally in cryptocurrencies?
The BCB Group CEO added that unlike traditional settlement methods, blockchains like the Ethereum network take just seconds to settle. “These blockchains are available globally as long as there is an internet connection, and have no transaction limits. It is possible to easily send $1 billion in USDC stablecoin (USDC-USD) from Canada to Australia in less than a minute.” he added.
To bridge this gap, traditional financial institutions are exploring innovative solutions. Visa (V) offered stable currency settlement for merchants, and JP Morgan (JPM) launched initiatives like Onyx, its blockchain-based platform for wholesale payments. Additionally, the UK government's plan to supervise fiat-backed stablecoins signals a broader trend toward adopting cryptocurrency-inspired settlement mechanisms.
“There are a number of traditional financial institutions now using blockchain technology to help reduce transaction times and improve access to global transactions. Leading companies in this space include Paypal, Visa and Société Générale with their European stablecoins,” Bob told Yahoo Finance UK.
Blockchain offers a range of settlement options
Discussing the instant settlement options that are becoming available, Bob highlighted the emergence of stablecoins, native cryptocurrencies such as Bitcoin (BTC-USD) and Litecoin (LTC-USD), as well as existing payment paths such as FPS in the UK and SEPA in Europe.
Furthermore, blockchain service providers offer cross-border payment solutions, exemplified by Ripple's on-demand liquidity service.
Regarding the appeal of Ripple and XRP (XRP-USD) for traditional financial institutions, Bob said: “Ripple and the XRP ledger as a means of transferring value are actually very effective.” He emphasized the potential benefit of this technology for financial institutions seeking to conduct efficient cross-border transactions.
The UK's ambition as a global cryptocurrency hub hangs in the balance
On the regulatory front, Pope acknowledged that the UK initially lagged behind the EU in regulating cryptocurrencies. However, he pointed to recent progress towards creating clearer frameworks, pointing to the UK's proposed legislation as a step towards providing certainty to market participants.
Read more: Standard Chartered analyst says Bitcoin ETFs are bracing for US pension plan inflows
However, Pope said concerns remain about the impact of regulatory uncertainty on the UK's ambition to become a global crypto hub. He warned that without clarity, foreign investments in the UK cryptocurrency and blockchain sector may shift to more regulated jurisdictions in Europe.
The BCB Group CEO noted that as traditional finance integrates crypto-inspired payment innovations, regulatory certainty has emerged as a crucial factor in ensuring the UK’s competitiveness on the global stage.
Watch: What is a Bitcoin Spot ETF and Why Has It Sparked a Cryptocurrency Rally? | Future focus
Download the Yahoo Finance app available for apple And Android.
