Crypto speculation dominates $600B cross-border payments: BIS report

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Hundreds of billions of dollars successful cross-border cryptocurrency payments travel globally, chiefly driven by speculative investment, according to a caller study by the Bank for International Settlements (BIS).

The BIS study, published May 8, recovered cross-border payments utilizing the 2 largest cryptocurrencies, Bitcoin (BTC) and Ether (ETH), and the 2 largest stablecoins, USDT (USDT) and USDC (USDC), totaled astir $600 cardinal during the 2nd 4th of 2024, the last reflection play covered by the analysis.

“Our findings item speculative motives and planetary backing conditions arsenic cardinal drivers of autochthonal crypto plus flows,” the BIS stated.

However, the study besides noted stablecoins and low-value Bitcoin transactions are often driven by applicable usage cases, peculiarly arsenic alternatives to accepted remittances. The researchers pointed retired that geographical barriers person little power connected cryptocurrency transactions compared to accepted fiscal systems.

Speculative crypto enactment remains tied to “global conditions for backing successful large crypto markets,” signaling a increasing “interconnectedness” betwixt cryptocurrencies and the bequest fiscal system, the researchers stated, adding:

“Concurrently, we observe that tighter planetary backing conditions, known to curtail risk-taking successful accepted plus classes, are associated with reduced flows. This indicates expanding interconnectedness betwixt cryptoassets arsenic speculative assets and mainstream finance.”

Additionally, crypto-specific risks and heightened nationalist consciousness importantly power crypto concern flows, reinforcing their relation arsenic speculative assets, according to the BIS.

The findings were published astir a period aft the BIS warned that the number of investors and magnitude of superior successful crypto and decentralized concern (DeFi) person “reached a captious mass,” posing a menace to fiscal stableness and planetary wealthiness inequality, Cointelegraph reported connected April 19.

Stablecoin, low-value Bitcoin payments fueled by fiat inflation, precocious transportation costs

Beyond speculative concern tools, stablecoins and Bitcoin are besides utilized arsenic a “transactional medium.”

“Higher accidental costs of fiat currency usage, specified arsenic precocious inflation, spur bilateral cross-border transactions successful some unbacked cryptoassets and stablecoins,” the BIS stated, adding:

“Likewise, greater economical enactment wrong some sender and receiver countries is often linked to accrued crypto flows successful astir cases.”

High remittance fees charged by accepted fiscal institutions further bolster crypto adoption for planetary wealth transfers, particularly from developed economies to emerging markets, the study stated.