ISO 20022 compliance is widely known as the revolutionary global financial messaging standard for digital currencies. A global standard means that crypto will be recognized everywhere, but is this move a necessary step for crypto adoption? Or does it undermine the very principles on which cryptocurrencies were built?
Cryptocurrencies have long existed outside the mainstream financial system, with their decentralized, peer-to-peer models offering a stark contrast to the traditional, centralized banking system.
However, as these assets evolve, there’s a growing interest in integrating them into global financial infrastructures. Financial authorities seem to agree that the best way for traditional financial institutions to find it easy to adopt cryptos is to employ a regulatory standard, which led to the ISO 20022.
The basics of ISO 20022
ISO 20022 is a financial messaging standard designed to provide a secure and standardized way for organizations to exchange financial information. It was introduced by the International Organization for Standardization (ISO) to replace the outdated SWIFT system used by banks and financial institutions for global payments.
While the standard was initially developed for traditional finance, its potential to serve the evolving digital currency market is now being explored.
A key issue that ISO 20022 seeks to address is the lack of Digital Token Identifiers (DTIs), which are crucial for distinguishing between different digital currencies. Unlike fiat currencies such as the U.S. dollar or the euro, cryptocurrencies like Bitcoin and Bitcoin Cash lack universally recognized identifiers, making them difficult for banks to track and process.
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