This year, while digital payments surged due to the coronavirus pandemic, crypto exchanges are seeing moderately little growth in the same period.
A survey of 118 regulators from 114 countries has exposed that the movement to a digital economy will increase demand for several forms of fintech activities, like digital payments and credit services.
While 60% of the study respondents have recognized an augmented usage or offering of digital payments and remittances during the pandemic, just 3% observed an increase in the use or offering of cryptocurrency exchanges.
Remarkably, the report has identified a split between the emerging market economies and advanced economies: where 6% of the respondents in advanced economies have seen an increase with the usage of crypto exchanges, just 2% with the emergence of economies did. The digital payments and remittances, the opposite of it were true, with 65% of respondents have seen an increase in the use of emerging markets, against 50% in advanced economies.
The study’s findings indicate the cryptocurrency market’s relative nascence, and the use of cryptocurrencies is a hypothetical vehicle.
Nonetheless, the regulators have taken an increasing interest in the space. The respondents have pointed to “draft guidelines for the virtual asset service providers” and reviewed frameworks around the blockchain to govern assets’ tokenization. The regulators undertook examples of measures in response to COVID-19.
CBDCs see a flow of interest.
It is not all bad news for the digital currencies; the boom in the digital payments and remittances identified by the report reflects the growing interest among the governments and banks around the central bank digital currencies (CBDCs).
Countries worldwide, involving China, South Korea, France, and the US, are developing or seeing their digital fiat projects. The regulators pointing out the traceability and openness are underlying welfares for the efforts.
The report’s authors have stated that the study’s findings around the digital payments were unsurprising, with the concerns regarding the spread of the novel coronavirus through cash and card transactions, “This also affirms the findings of other studies referencing an acceleration in the shift to digital payments,” they stated in a report.
Fresh dangers and trials
The mentioned survey has also highlighted the emerging risks in the digital economy. Cybersecurity implications (78%) served as the top-most risk for regulators, with operational risks (54%), consumer protection (27%), and fraud and scams (18%) presenting smaller concerns.
“On systemic risk, a targeted cyber-attack or some other form of external threat on a major fintech company has the potential to disable large parts of the economy without notice,” a regulator from the Asia Pacific region remarked.
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