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- Stellar, Cardano and Hedera are among the crypto tokens compliant with ISO 20022, positioning them as major players in a new era of cross-border fund transfers.
- ISO 20022 will replace SWIFT, the ubiquitous financial messaging protocol that industry players have depended on for five decades, and crypto is primed to play a significant role.
After five decades of being the default financial messaging protocol, SWIFT will soon be replaced, and the era of ISO 20022 will be upon us. With crypto now firmly established as a significant stakeholder in the payments and money transfer industry, several crypto networks are working on being ISO 20022-compliant, with Hedera, Cardano, Ripple, and Stellar among those that have achieved this feat.
While every other sector has been revolutionized by technology, the financial industry has seemed impervious to tech advancements, with banks still taking days to transfer funds and most services still costing a pretty penny. However, technology is gradually seeping through, and ISO 20022 could be one of the most defining.
The new messaging protocol will enhance communication between financial institutions, making transfers more accessible, faster, and cheaper. It will also foster interoperability between players in different regions or building on varying tech stacks.
Beyond efficiency, the new standard will also be critical in cracking down on new digital crimes in the AI and quantum computing era. Users will also be able to detect fraud and ensure compliance while managing liquidity efficiently.
For crypto, being compliant with the new ISO standard is critical. When SWIFT came about, blockchain and crypto didn’t exist, and as such, they found it almost impossible to break in. However, with ISO 20022, crypto will be one of the founding members. Once they are assigned ISO codes, crypto networks and tokens could be seamlessly integrated into centralized financial systems, transforming crypto and the entire financial and legacy banking industry.
Hedera, Stellar, Cardano Prepare for ISO 20022
The deadline for implementation of ISO 20022 is 2025, and dozens of cryptos are gearing up for the transformation. However, the currently compliant cryptos are Stellar, Cardano, Ripple, Quant, Verge, Algorand, Hedera, IOTA, and XDC.
For virtual asset service providers seeking ISO 20022 compliance, the checklist includes ensuring compliance with local and regional regulations, including sufficient AML and KYC checks. They must also observe data security measures and a well-documented governance and support structure.
The VASPs must also engage in educating their clients on the impact of migrating from SWIFT to ISO 20022 while allocating sufficient resources to train their staff about the impact of the new ISO standards.
The drawback for cryptos becoming ISO 20022-compliant is that it only moves them further from the perceived decentralized ethos that crypto purists have hung on to. With the new standard, crypto will become part of the centralized global financial system.
