Cryptocurrencies in Global Payments: Navigating Sanctions

Current adoption of cryptocurrencies in global payments

PayPal's new feature allows U.S. Xoom users to convert PYUSD to USD for global money transfers, highlighting the growing adoption of cryptocurrencies in cross-border payments. This initiative aims to drive mainstream cryptocurrency use while offering a secure, cost-effective way to send money internationally.

"Rolling out to customers in the U.S. starting today, the new funding option will allow U.S. Xoom users to easily convert the PYUSD in their linked PayPal Cryptocurrency Hub to USD and use that as a funding source to send money to recipients in approximately 160 countries globally with no Xoom transaction fees." --- (PYPL, press release, 2024/04/04)

"And the strong payments drivers helped fuel services growth. That, coupled with strong demand drove 19% value-add services and solutions net revenue growth in the second quarter on a year-over-year currency neutral basis, this is our powerful flywheel turning.I'm excited about our momentum and the future potential whether it's deepening penetration of existing customers, launching new capabilities or distributing our services in new ways and across new customer and transaction types." --- (MA, earning call, 2024/Q2)

"This new research shows incredible acceleration of digital payments, but there is still more the industry can do to bring streamlined remittances within reach for more migrant workers and their families who rely on these lifeline payments. The Money Travels: 2024 Digital Remittances Adoption study examines how consumers send money abroad, diving into the rates, methods, and reasons for sending and receiving these lifeline payments." --- (V, press release, 2024/06/12)

"Today, we operate in a massive $6 trillion plus global e-commerce market that benefits from the ongoing digitization of payments and commerce in new contexts." --- (PYPL, earning call, 2024/Q2)

""Enabling U.S. users of Xoom the option to fund cross-border money transfers using PYUSD builds on our goal of driving mainstream adoption of cryptocurrencies while also offering an easy way to securely send money to friends and family at a lower cost." How to Fund Xoom Transactions using PYUSD U.S. Xoom users1 with a sufficient PYUSD balance in their PayPal Cryptocurrency Hub to cover an eligible Xoom transaction will be able to select PYUSD to fund their transfer when using Xoom.com, PayPal.com, and the PayPal app." --- (PYPL, press release, 2024/04/04)

Regulatory and compliance challenges in cryptocurrency payments

Balancing efficiency with compliance is crucial, as highlighted by Bank of America. Coinbase and Google emphasize the importance of regulatory clarity and the risks of non-compliance. Goldman Sachs underscores the severe consequences of failing to meet regulatory standards, including legal sanctions and reputational damage.

"The analysts said in a note to clients that Coinbase is likely to benefit from an improving regulatory environment in the U.S. after the presidential election this autumn, as well as from trading activity related to new cryptocurrency exchange-traded funds (ETFs)." --- (COIN, press release, 2024/07/23)

"Then it gives you the opportunity to continue to make those investments. And then at the same time, absolutely, you're constantly looking to make sure that you're running things as efficiently as possible, but not so efficiently that you start to lose out on compliance and on all the regulatory issues." --- (BAC, conference, 2024/05/08)

"Compliance Risk Management Compliance risk is the risk of legal or regulatory sanctions, material financial loss or damage to our reputation arising from our failure to comply with the requirements of applicable laws, rules and regulations, and our internal policies and procedures." --- (GS, sec filing, 2024/Q1)

"As the regulatory landscape continues to evolve globally, failure to comply with relevant regulation may lead to significant risk to the company." --- (GOOG, event transcript, 2024/06/07)

"And third, we're driving regulatory clarity. We're doing this through the courts, through collaboration with policymakers around the world to pass sensible rules, and most importantly through activating the crypto voter base to elect pro-crypto candidates in this upcoming election." --- (COIN, earning call, 2024/Q1)

Technological advancements in cryptocurrency payments

Technological advancements in cryptocurrency payments are highlighted by PayPal's creation of PayPal USD, aimed at revolutionizing commerce with fast, easy, and inexpensive transactions. Visa's integration of tokenization and cryptography further enhances security and uniqueness in payment credentials, showcasing significant strides in the field.

"PayPal USD was created with the intent to revolutionize commerce again by providing a fast, easy, and inexpensive payment method for the next evolution of the digital economy," said Jose Fernandez da Ponte, Senior Vice President of the Blockchain, Cryptocurrency, and Digital Currency Group, PayPal." --- (PYPL, press release, 2024/05/29)

"We said we're going to give you a payment credential. We're going to put a chip on a card with tokenization, cryptography on it that makes that card unique and it's bound to the credential." --- (V, conference, 2024/05/21)

Role of financial institutions in cryptocurrency adoption

Financial institutions like Citigroup, JPMorgan Chase, and Morgan Stanley are increasingly recognizing the potential of cryptocurrencies. Citigroup and Morgan Stanley highlight the role of crypto ETFs in facilitating adoption, while JPMorgan focuses on deepening client relationships in high-growth sectors, potentially including cryptocurrencies.

"Citigroup also says in its note that the potential for additional cryptocurrency ETFs and the increased adoption of cryptocurrencies more broadly could also provide tailwinds to Coinbase." --- (Citigroup, press release, 2024/07/23)

"First, deepening our relationships with clients across the board. From extending our lead with financial institutions to improving our position with corporates, as well as targeting high growth sectors like technology and healthcare and end to end ecosystems like sponsors and the innovation economy." --- (JPM, Investor Day, 2024/05/20)

"The ETFs allow the people to track the price movements of Bitcoin, the largest cryptocurrency by market capitalization, without having to physically own the asset in a digital wallet." --- (MS, press release, 2024/04/25)

"Up next, we have the financial institutions where we are the trusted advisor and supplier of services to 1500 FIs around the world, and we serve the top banks and FIs in 149 countries." --- (C, Investor Day, 2024/06/18)

"Corporate partners, as you know. They don't actually have to act as lone wolves, and they can work with us to finance the package. So it is not just the straight M&A advise or the straight IPO, it would also be bespoke offerings in the private public space, interest rate and foreign exchange hedging and the other ornaments on the investment banking tree that a couple of the leading global investment banks can bring." --- (MS, earning call, 2024/Q2)

Future outlook for cryptocurrencies in global payments

Cryptocurrencies are poised to revolutionize global payments by offering faster, cheaper, and more efficient transactions. Coinbase is leading this transformation by modernizing the financial system with blockchain technology, enabling fast, free global transfers and broad engagement with crypto assets.

"We talked about Base, getting those transaction fees under one second and $0.01 and just not only is it really interesting for global payments, but it's interesting for lots of different applications, that can be built on blockchains." --- (COIN, earning call, 2024/Q1)

"We're updating the century-old financial system by providing a trusted platform that makes it easy for people and institutions to engage with crypto assets, including trading, staking, safekeeping, spending, and fast, free global transfers." --- (COIN, press release, 2024/07/18)

"We're updating the century-old financial system by providing a trusted platform that makes it easy for people and institutions to engage with crypto assets, including for trading, staking, safekeeping, spending, and fast, free global transfers." --- (COIN, press release, 2024/04/04)

"We're updating the century-old financial system by providing a trusted platform that makes it easy for people and institutions to engage with crypto assets, including trading, staking, safekeeping, spending, and fast, free global transfers." --- (COIN, press release, 2024/06/04)

"We feel like we have plenty to do in the crypto space and we want to really focus on how crypto rails can be used to update the global financial system and make things faster, cheaper, more global." --- (COIN, earning call, 2024/Q1)