As expected, the interest in retail solutions is mainly in developing economies, while wholesale trading matters only when very large transactions occur, and it happens primarily in developed economies (Deloitte, 2022). As virtual currencies are an unauthorized, decentralized, and uncontrollable exchanging platform, many regulators are worried about the increasing misuse of these currencies by criminals for illegal activities. It has been seen that many unlawful activities like tax evasion, money laundering, and terrorist financing have been carried out by criminals using digital money. In July 2019, Treasury Secretary Steven Mnuchin shared their concerns about the misuse of Facebook, Inc.’s patented Libra digital currency by terrorist financiers and money launderers. Moreover, growing security concerns and cyber-attacks have led to the loss of the invested currencies, limiting the adoption of cryptocurrencies.
Maturing bitcoin cash value and the facility to offer rewards for transactions are also upsurging digital cash’s market value. Developing countries like Japan, the U.S., European countries, and many more indicate people’s inclination towards digital currency, which is expected to facilitate the cryptocurrency market growth in upcoming years. One key issue in defining the CBDC project is the target usage of the new currency that could be focused on retail payments and/or wholesale negotiations among financial institutions (BIS, 2023a). In the first case, the new currency will substitute partially the traditional currency while in the second case, the usage of the new payment solution is limited to trades among large investment banks and companies. There are several differences in the choices adopted for developing CBDCs (see Figure 4). According to the analysts at Chainalysis, it is almost impossible to precisely specify the profits generated by trading in cryptocurrencies for individual investors or wallets due to the decentralized nature of the blockchain.
Cryptocurrencies may be readily offered to unbanked or underbanked citizens with lower costs for standard financial services. The segment focuses on crypto solutions that are used for trading, such as Pionex, Cryptohopper, Bitsgap, Coinrule, and others. E-commerce and retail companies have started accepting cryptocurrencies as a payment option. For instance, in September 2019, The German branch of chain Burger King restaurant accepted bitcoin as payment for its online deliveries and orders. Cryptocurrency is a type of decentralized currency that is digitally bought and sold. It is fascinating because the different types of cryptocurrency can give people buying power in the global market.
Your balance may show the funds, but money hasn’t actually moved between banks yet,” according to Cunha. “If I gave you CBDC, it’s as if I’m handing you physical money, like a $100 bill. The Federal Reserve issued a report earlier this year that “a CBDC could fundamentally change the structure of the U.S. financial system. More than 100 countries are exploring CBDCs at one level or another, according to the IMF. But as of 2022, only a handful of countries and territories have CBDC or have concrete plans to issue them.
BIS (2022b), “Gaining momentum – Results of the 2021 BIS survey on central bank digital currencies,” BIS working paper 125. BIS (2021), “Impending arrival – a sequel to the survey on central bank digital currency,” BIS paper 107. BIS (2020), “Proceeding with caution – a survey on central bank digital currency,” BIS paper 101. Among these, Bitcoin is a highly adopted digital currency in the market.
We approximate individuals’ cryptocurrency activity by measuring the amount of cryptocurrency moved in retail transactions, which we designate as any transaction for under $10,000 USD worth of cryptocurrency. We then rank each country according to this metric but weight it to favor countries with a lower PPP per capita. Cross-border payments are the lifeblood of the global economy, facilitating remittances, business transactions, and the movement of capital that fuels development. Today, with our existing technology, we can take a significant step forward to improve retail cross-border payments. The penetration of virtual currencies in digital payment is expected to affect cross-border remittances.
