What to Know:
- CoinMarketCap has categorized XRP and Cardano as ISO 20022 compliant assets.
- ISO 20022 is a messaging standard upgrade, not a settlement system.
- Financial institutions are rapidly adopting ISO 20022 globally.
The crypto market is seeing increased focus on regulatory compliance and interoperability, with CoinMarketCap recently listing XRP and Cardano in its new ISO 20022 token category. This categorization arrives as traditional finance increasingly integrates blockchain solutions, and institutions seek assets aligning with established standards. For investors, this raises questions about the practical implications for liquidity, adoption, and long-term value.
CoinMarketCap’s creation of an ISO 20022 category highlights digital assets claiming alignment with the global financial messaging standard. XRP and Cardano lead the list, accompanied by other tokens like Chainlink, Stellar, and Hedera. While the combined market valuation of these tokens is significant, the critical question is whether this alignment translates into tangible benefits or remains a superficial association.
The ISO 20022 standard is designed to streamline financial communications between banks and institutions. Its rising relevance has spurred debate within the crypto community about which digital assets genuinely align with the standard. Cardano founder Charles Hoskinson has emphasized ISO 20022’s importance for open banking, potentially bridging the gap between decentralized and traditional finance. This perspective suggests that assets fitting into this framework may see enhanced institutional interest over time.
Financial institutions worldwide are rapidly adopting ISO 20022, with Ripple becoming one of the first crypto-focused companies to join the ISO 20022 standards body in 2020. Major traditional financial institutions, including the U.S. Federal Reserve, are also integrating the standard. With estimates suggesting that nearly 80% of financial institutions will use ISO 20022 by year-end, the shift signals a move towards standardized communication protocols, which could benefit crypto projects that proactively align.
It’s important to distinguish between messaging standards and settlement systems. Despite some speculation, ISO 20022 is a messaging upgrade and not a settlement system directly tied to any cryptocurrency. Experts, including former Ripple developers, have clarified that XRP has no special status under ISO 20022. This distinction is crucial to dispel any misconceptions about the standard “forcing” banks to use XRP.
The broader implications of ISO 20022 adoption are still unfolding. While it may not directly impact the utility or adoption of specific cryptocurrencies, it signifies a move towards greater interoperability and standardization within the financial industry. This trend could indirectly benefit crypto projects that prioritize compliance and integration with traditional financial systems, potentially opening new avenues for institutional investment and partnerships.
In conclusion, CoinMarketCap’s categorization of XRP and Cardano as ISO 20022 compliant assets underscores the growing importance of regulatory alignment in the crypto space. As financial institutions increasingly adopt ISO 20022, crypto projects that proactively embrace these standards may gain a competitive edge in attracting institutional capital and fostering broader adoption. However, it’s essential to maintain a clear understanding of the standard’s limitations and avoid unrealistic expectations about its direct impact on specific cryptocurrencies.
Source: Original article
