Financial Institutions Need to Pay Attention to Cryptocurrency
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Cryptocurrency has evolved from a niche digital asset years ago into a disruptive force in financial services today. In its earliest days, it was seen as a speculative investment; it now plays an emerging role in payments, banking and global finance. Today, barriers to entry are being removed, leaving many payments professionals wondering what the future of cryptocurrency means for the industry.
Payment mechanisms, such as ACH, are commonly used in the funding and off-railing of crypto exchange transactions. It is imperative that financial institutions understand the implications of how traditional mechanisms intersect with crypto today. Customers are already doing this, and the current landscape is ready for more cryptocurrency activity and payment participants should keep up with this evolution.
Defining Cryptocurrency?
Cryptocurrency is a digital currency that operates on decentralized blockchain networks. Many cryptocurrencies leverage blockchain technology, which allows for the movement of data and money in a secure environment controlled by consensus mechanisms and verified sources of truth. Let’s quickly explore different types of crypto:
- Digital/Virtual Currency – Electronic currency that can be used for the same purposes as physical currency.
- Altcoins – Built on the foundation of bitcoin technology. These coins share characteristics with bitcoin’s codebase but are modified to accomplish different purposes. Many altcoins operate like an investment.
- Stablecoins – A form of digital currency backed by fiat currency or another collateral based on stabilized value.
- Central Bank Digital Currency – A digital currency owned and controlled by a central bank is the equivalent of fiat currency.
Diving Further into Stablecoins
Stablecoins have become a hot payment topic central to recent policy and regulatory movements. Roughly 200 stablecoins exist today, creating a tapestry of options and features. This complex ecosystem is maturing, and the current administration and Congress have focused in on it.
The U.S. House of Representatives advanced a stablecoin bill supported by the Trump administration on April 2, 2025, that will allow stablecoin companies to profit from the interest from reserves related to the fiat currency used to back the coin. In addition, Senator Bill Hagerty, R-Tenn., has also introduced S.394 - GENIUS Act of 2025 to establish national standards while allowing states to create localized regulations. Its focus is to protect consumers and establish stablecoin definition and classification, create reserve requirements, define licensing procedures, create a dual regulatory framework (both state and federal), ensure Aanti-mMoney Laundering (AML) compliance, align international governance standards, and protect the dominance of the U.S. dollar.
Why Does Cryptocurrency Including Stablecoins Matter in Payments?
Whether a financial institution has active poliiescy and governance for cryptocurrency, including customer usage, many consumers and businesses are leveraging this technology. Moving funds from mainstream financial services to crypto exchanges requires another payment mechanism. Likewise, when funds return to mainstream financial services, customers use other payment mechanisms to move funds out of a crypto exchange.
Financial institutions need to know what is happening in this space and understand their customers' activities. In addition, some institutions are actively looking into developing their own stablecoin solutions, whether as an organizational closed-loop solution or through consortiums with other companies.
Nacha Consulting is Here to Help
Nacha Consulting has tapped is immersed in into what is happening in the crypto space, including active engagement in industry groups and initiatives, such as leading the Nacha Payment Innovation Alliance Navigating Through Digital Payments project team.
Is your organization having difficulty filtering out all the noise to tap into what’s essential with cryptocurrency? Are you trying to figure out your place in the crypto ecosystem and how you might strategize? Are you just trying to get a handle on monitoring and ensuring safe and compliant crypto usage? Nacha Consulting is here to help!
