Cryptocurrencies Reshaping Payments

You met cryptocurrencies and stablecoins in ch27. This lesson does not re-explain them. It asks what they change for payments, and how a payments professional separates the useful technology from the speculation around it. The short version is that the ledger, the instant settlement and the programmable payment are genuine innovations, while the price speculation and the promise of easy profit are not part of the payments story. Settlement is the feature that attracts banks and payment firms. A stablecoin payment can settle in minutes, at any hour, including weekends when traditional systems are closed. A company in Singapore paying a supplier in Brazil on a Saturday no longer waits until Monday for the correspondent chain to open. The payment moves wallet to wallet on the ledger, and the ledger record is the proof of settlement. That speed is valuable, but it also means a mistaken payment cannot be recalled through a banking operations team in the same way. Banks are exploring two related ideas, tokenised deposits and central bank digital currencies. A tokenised deposit is a bank deposit represented as a digital token on a ledger, so it can move instantly between accounts inside the same bank or across banks that share the ledger. A central bank digital currency is a digital form of central bank money, issued by the central bank itself. Both ideas keep the payment inside regulated money, which is very different from an unregulated cryptocurrency, and both are being tested in pilots in several countries. Regulation and risk remain the main brakes on adoption. A stablecoin issuer must hold reserves that match the coins in circulation, publish audited proof of those reserves, and follow anti money laundering rules. If the reserves are weak or unclear, the coin can lose its peg and holders can lose money, as several failures have shown. Banks that touch stablecoins must therefore check the issuer, the reserve quality, the redemption process and the legal status of the coin in every country where it will be used. For payment professionals, the skill is to separate the useful technology from the speculation around it. The ledger, the instant settlement and the programmable payment, where money moves only when a condition is met, are genuine innovations that banks can use. A trade payment of 200,000 dollars could release automatically when shipping documents are confirmed, without a manual instruction. The price speculation, the unregulated exchanges and the promise of easy profit are not part of that story. A business analyst who can explain that difference clearly will be trusted when a bank decides where crypto fits in its payment strategy. Worked example with numbers: a company in Singapore pays a supplier in Brazil USD 50,000 on a Saturday using a US dollar stablecoin, and the payment settles in minutes on the ledger, while the traditional correspondent route would wait until Monday and cost around USD 25 in correspondent charges plus a foreign exchange spread of about 0.5 percent, about USD 250. The stablecoin route saves the weekend wait and the spread, but it adds a new cost, the conversion from dollars to stablecoin and back, which the company must price before it chooses the route. The saving is real only when the conversion cost is lower than the correspondent charges and the spread it replaces. Failure and recovery: a stablecoin payment fails when the coin loses its peg, when the wallet address is wrong, or when the issuer reserves are in doubt. If the coin drops to USD 0.98 during the payment, the supplier receives less than the invoiced amount, and the dispute is about who bears the shortfall, the payer, the supplier or the converter. If the wallet address is typed wrong, the payment goes to an address nobody controls, and unlike a bank payment it cannot be recalled, because there is no bank to ask. The recovery is prevention: the payment must be validated before sending, the address must be checked against a known list, and the amount must be confirmed after conversion, because a stablecoin payment that has settled cannot be reversed. For a business analyst, product owner or subject matter expert, the stablecoin requirement must name the issuer, the reserve backing, the redemption route and the wallet custody, and must state what happens when the peg breaks or the issuer fails. The requirement must also state the compliance checks, wallet screening, sanctions screening and anti money laundering checks, and must name the party that performs each one. A design that treats a stablecoin as just another currency will pass its happy path tests and fail its risk review, because the risks are different, and the regulator will ask about them first. Source: Bank for International Settlements, stablecoin reports; last reviewed 7 November 2026. Blockchain settlement for payments uses a distributed ledger to record the transfer of value, and the key property is that the ledger is shared, immutable, and agreed by consensus. When a payment is made on a blockchain, the transaction is broadcast to the network, validated by the participants, and recorded in a block that cannot be altered. The settlement is final when the block is confirmed, and the finality is determined by the consensus mechanism, not by a central bank. For a public blockchain like Bitcoin, finality is probabilistic, because a longer chain can replace a shorter one, and the payment is considered final after a number of confirmations, usually six. The settlement risk in blockchain payments is different from the settlement risk in traditional payments. In a traditional payment, the risk is that one party pays and the other does not deliver, because the payment and the delivery are separate. In a blockchain payment with atomic settlement, the payment and the delivery happen in the same transaction, so the risk is removed. But a new risk appears: the smart contract risk, which is the risk that the code has a bug, and the bug causes the payment to go to the wrong address, or to be locked forever. The DAO hack of 2016, where 60 million dollars of ether was stolen because of a bug in a smart contract, is the case that every blockchain analyst must know. The regulatory position on blockchain settlement is that the technology does not change the regulation. A payment made on a blockchain is still a payment, and the firm that makes it must be licensed, must screen it, must report it, and must safeguard the customer money. The Financial Action Task Force Travel Rule applies to crypto-asset transfers, requiring the originator and beneficiary information to travel with the transfer, just as it does for a wire transfer. The EU Markets in Crypto-Assets Regulation applies to crypto-asset service providers, requiring authorisation, capital, and conduct rules.