- ISO 20022-compliant digital assets might become the standard for regulatory enforcement because they can work with CBDCs.
- Ripple’s XRP and Stellar Lumens’ XLM are the only tokens that suit the creation of CBDCs.
Since the explosion of cryptocurrency into the mainstream, regulators have been trying to see which digital asset will more likely fall in line with their view of interoperability. Hence, they are trying to incorporate ISO 20022 crypto assets because they suit the regulators’ development of a CBDC.
ISO 20022 is the global standard for exchanging electronic messages between financial institutions through the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
This system is set to change how banks communicate and enhance interoperability. In addition, integrating key crypto assets like Bitcoin and Ethereum into the SWIFT ecosystem and giving them an ISO number will radically change how digital assets and fiat currency interact.
Ok but this is just confusing, like, make up your mind 😅
"At this point, Ripple's XRP (XRP) is the only cryptocurrency player officially part of the ISO 20022 financial industry messaging scheme. Another compatible and compliant cryptocurrency is Stellar Lumens (XLM)."— WrathofKahneman (@WKahneman) September 21, 2022
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Furthermore, the European Union (EU) is transitioning to ISO 20022 in November 2022 to facilitate high-volume cross-border transactions. This will involve the Target 2 system, the financial settlement platform adopted by all central banks within the EU bloc.
However, the U.S. Federal Reserve plans its transition into the ISO 20022 system for November 2023. Experts believe that ISO-compliant cryptocurrency will change the digital asset landscape, and regulators will ease their strict stance in dealing with ISO 20022 assets. They believe this move will boost mass adoption of the standard on a broad scale.
The two verifiable ISO 20022-compliant digital assets are Ripple (XRP) and Stellar Lumens (XLM). Others that might be compliant include Algorand (ALGO), Hedera Hashgraph (HBAR), Iota (IOTA), Quant (QNT), Cardano (ADA), and XinFin (XDC).
XRP and XLM are ISO 20022 Compliant
Ripple’s native token, XRP, is among the largest ISO 20022-compliant asset. With its top ranking in the ISO Standards Body, Ripple plays a significant role in developing and implementing the ISO 20022 standard.
In contrast to other traditional cryptos like Bitcoin, Ripple’s ODL technology is designed to be a digital payment system and a quick settlement platform between banks and other financial institutions. Besides being utilized as collateral for payments, XRP is used for currency conversion and cross-border transactions.
Besides being suitable for developing CBDCs, the XLM token can also be used as a settlement medium for fiat currency conversion.
More than 300 banks and financial service providers across 45 countries use XLM for settlement. The Canadian Imperial Bank of Commerce and Santander are two banks that utilize the token for this purpose, with others in Brazil, Singapore, and India.
Despite being intended as a replacement for SWIFT, ISO 20022 will further bolster the Ripple ecosystem by increasing the sync between XRP and SWIFT. With the CBDC becoming the preferred option for regulators, any crypto asset that meets the ISO 20022 requirements will likely become a yardstick for others.
Meanwhile, due to their design, it will be difficult for cryptocurrencies like Bitcoin and Ethereum to meet the ISO 20022 Standards.
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The article in question delves into the pivotal role of ISO 20022-compliant digital assets in shaping the future of regulatory enforcement, particularly in conjunction with Central Bank Digital Currencies (CBDCs). The assertion that Ripple's XRP and Stellar Lumens' XLM are the exclusive tokens suitable for CBDC creation underscores the significance of adhering to ISO 20022 standards in the cryptocurrency realm.
ISO 20022 is portrayed as the global standard for electronic message exchange among financial institutions through SWIFT, emphasizing its transformative impact on communication and interoperability among banks. This standard is seen as a game-changer, and the integration of key crypto assets such as Bitcoin and Ethereum into the SWIFT ecosystem, assigned with ISO numbers, is expected to revolutionize the interaction between digital assets and fiat currency.
The article highlights the confusion and uncertainty surrounding the adoption of ISO 20022 in the cryptocurrency space, as evidenced by the tweet from WrathofKahneman. It points out that Ripple's XRP is the only cryptocurrency officially integrated into the ISO 20022 financial messaging scheme at the time of the tweet.
The transition of the European Union to ISO 20022 in November 2022 and the U.S. Federal Reserve's planned transition in November 2023 are cited as significant milestones. Experts predict that ISO-compliant cryptocurrencies, particularly XRP and XLM, will reshape the digital asset landscape, leading to a relaxation of regulatory stances and widespread adoption of the ISO 20022 standard.
The list of potential ISO 20022-compliant digital assets includes not only XRP and XLM but also Algorand (ALGO), Hedera Hashgraph (HBAR), Iota (IOTA), Quant (QNT), Cardano (ADA), and XinFin (XDC). These assets are viewed as candidates that may meet the ISO 20022 requirements, expanding the options for regulators and the broader industry.
The detailed analysis of Ripple's XRP and Stellar Lumens' XLM as ISO 20022-compliant assets further underscores their significance. Ripple's XRP, with its top ranking in the ISO Standards Body, is positioned as a major player in developing and implementing the ISO 20022 standard. The article elucidates how XRP functions as a digital payment system, settlement platform, and collateral for payments, emphasizing its suitability for CBDC development and cross-border transactions.
Similarly, Stellar Lumens' XLM is highlighted for its role as a settlement medium for fiat currency conversion, with over 300 banks and financial service providers across 45 countries utilizing it for settlement purposes. Notable institutions such as the Canadian Imperial Bank of Commerce and Santander are mentioned as users of XLM, further solidifying its credibility.
In conclusion, the article provides a comprehensive overview of the evolving landscape of ISO 20022-compliant digital assets, backed by evidence and insights into the functionalities and applications of specific cryptocurrencies within this paradigm.
