Dive Brief:

• Digital ledger technology could be used to foster financial inclusion, but some of the benefits would be offset by challenges, according to a report released by the U.S. Faster Payments Council and real-time payments software firm ACI Worldwide last Wednesday.
• Using digital assets and digital ledger technology to power payments could provide low-cost options for small-scale transactions and cross-border remittances, the report said. It could also improve transaction security and accuracy, ensuring that users are sending funds to the correct party.
• However, if critical providers don’t adopt the digital approach, liquidity difficulties could arise and deter the public from using them. Furthermore, the irrevocability of digital assets could dissuade users from using such services, because there are no resolutions for errors or fraud, the report said. 

Dive Insight:

“With billions of people worldwide remaining outside the traditional financial system, digital assets present an opportunity to bridge gaps in accessibility, affordability, and security,” said a Wednesday press release that accompanied the report.

Integrating digital asset technology into the U.S. financial system would likely be an uphill battle, the report suggested. Harnessing digital ledger technologies, such as blockchain technology, to foster financial inclusion would require collaboration between multiple stakeholders, namely government and private sector entities, the report said. Public-private partnerships might prove useful.

Still, collaboration could be hindered by “differing objectives and regulatory standards,” the report said.

Creating a centralized system with various digital asset access points could make digital assets more accessible for underserved consumers, but they would need to be designed in a way that is “culturally and contextually relevant,” the report said.

“Digital assets have the potential to transform payments, but realizing this potential requires a thoughtful, collaborative approach,” Bo Berg, who chairs the council’s digital assets work group, said in the release. “This report serves as a blueprint for financial institutions, policymakers, and industry leaders to harness digital assets responsibly and effectively.”

Development of digital asset uses is also a priority for President Donald Trump’s second presidential administration. Diversity, not so much.

During his first week in office in January, Trump signed an executive order supporting digital financial technology and calling for a working group to make recommendations for his administration. Last week, Trump also named cryptocurrencies that would be part of a strategic national crypto reserve he announced on Truth Social, the social media network he owns.

Nonetheless, he also signed an executive order in January titled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” aimed at dismantling the practice of diversity, equity, and inclusion initiatives and policies at federal agencies. 

Trump has had a change of heart regarding the crypto industry. In a 2021 interview on Fox Business, he referred to bitcoin as a “scam” that could impact the value of the U.S. dollar.