Fitch Ratings Doubt Rapid Popularisation of Cryptocurrencies

Cryptocurrencies remain far from crossing into the mainstream, though they could modernize the financial system in the long term. This is stated in Fitch’s report.

Analysts examined initiatives to include cryptocurrencies in the product lines of payment companies MoneyGram, Visa, Mastercard, Square and PayPal. The latter launch the purchase and sale of bitcoin for American clients was described as the first real use case of cryptocurrencies in the United States not related to trading.

The agency believes that the new direction will not affect the credit profiles of the companies and could become another source of net income.

“We expect a limited impact on the credit profile in the mid-term. This is indicated by the relatively small volume of strategic investments in cryptocurrencies and the long time required to master them. At the same time, it will create a base for additional revenues even if the return on investment over time and regulatory risks remain unclear”, the experts noted.

In Fitch, they see potential for cryptocurrencies in increasing the speed of settlements, reducing fees, improving security and anonymity, and creating conditions for 24/7 money transfers. In the analysts’ view, the realization of these advantages is possible with proper regulation.

“Stricter oversight could become a barrier, especially if issuers of digital currencies are required to obtain banking licenses, maintain reserves, and comply with regulations for financial institutions”, the experts explained.

In December 2020, a group of lawmakers introduced into the U.S. Congress bill requiring stablecoin issuers to obtain banking licenses and regulatory approval.

Earlier, Germany, France, Italy, Spain and the Netherlands urged the European Commission to develop strict rules for stablecoins.

In July, the Financial Action Task Force announced the development of new rules for stablecoin issuers.

Regulation at scale: what changed for Bitcoin and cryptocurrencies in 2020

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