Since Facebook releasing of the “Libra White Paper” in June 2019 stirred the global financial market, the headlines about blockchain and digital currencies have never dissipated but more intense. The digital currency DCEP being studied by the People’s Bank of China and the launch of Libra has pushed this wave to unprecedented heights and raised public awareness of blockchain and digital currencies.
Today’s electronic payment tools cannot meet the public’s anonymous needs since the internet payments and bank card payments are tightly bound to the traditional bank account system. Also, the traditional payment methods are limited by complexity International regulatory and legal frameworks that vary greatly from country to country.
As the product of the digital economy, blockchain payment on the one hand improves the portability and security of the currency, and on the other hand it improves the efficiency and convenience of transactions and investments.
Blockchain payment can bypass various centralized controls for payment without any geographical restrictions in an anonymous and faster way. The rise of blockchain payments can no longer be stopped, and the payment industry will be forced to change, so as to build a new pattern of more inclusive, more real-time, smarter, more cross-border, and more efficient payments.
However, due to the anonymity and difficult supervision of blockchain payments, there are illegal acts such as money laundering and tax evasion. For example, criminals buy tokens from the stolen money in their hands. Because of the anonymity and decentralization of cryptocurrencies, they avoid the supervision of third parties. After cross-border transfer, they are converted into local legal currency in another country.
According to Megan Doyle’s article published on American Express “Are Blockchain Payments Systems Living Up to the Hype?” Many organizations are exploring the technology’s possibilities with new approaches. Some financial institutions, for example, are honing in on fewer use cases, scrutinizing blockchain payment experiments and proof-of-concepts, and carefully addressing governance and compliance strategies. Other organizations still set on blockchain are combating disillusionment from overhype by using the term “distributed ledger technology” in place of “blockchain,” notes a recent Forrester report.
Whether blockchain will revolutionize the payments industry remains uncertain, to better serve the society instead of being used by criminals, the regulatory consideration for blockchain payment must be more comprehensive. After all, current established rules cannot be applied into blockchain payment scheme. In the face of this situation, regulators should have a qualitative view of blockchain payments and cross-border challenges to better monitor the payment process.