Lack of crypto regulations delays DeFi adoption

The survey, conducted by Ripple and The US Faster Payments Council, has found that almost 90% of payment companies believe a lack of regulatory clarity is deterring merchants from adopting cryptocurrencies.

cryptocurrency coin representation
89% of payment companies believe merchants do not adopt cryptocurrencies because of a lack of regulatory clarity

Decentralized digital payment network Ripple and The US Faster Payments Council (FPC), a membership that promotes fast and secure payment methods, have conducted a survey to explore trends in the market of payment solutions. The group of survey participants was comprised of about 300 leaders of payment firms including C-level executives, directors, and analysts.

According to the study, the majority of participants have agreed on the potential of decentralized payment solutions to solve current problems and mentioned the lower cost of international and domestic transactions as the main advantage of crypto payments.

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For 32% of participants, the cost of international payments is the most significant benefit, and for 19% the cost of domestic transfers is even more important. 36% of surveyed leaders also see great potential in the speed of payment processing. Participants found the fact that crypto transfers have higher transparency than traditional ones less useful.

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"Cryptocurrencies and, more generally, the mindset of innovation that led to their creation and growth in the marketplace are exciting for the future of payments. Cryptocurrencies present a potentially compelling blend of flexibility and utility. They appear well-positioned to solve some seemingly intractable issues in payments by filling various gaps in payment flows efficiently and effectively," said Reed Luhtanen, executive director of The US Faster Payments Council.

Furthermore, participants have been asked about their prediction for the adoption of cryptocurrencies by more than 50% of merchants in different regions of the world. The results have shown that surveyed leaders from MEA believe that this region could adopt cryptocurrencies faster than any other part of the world, with 27% expecting it to happen within a year, and 64% predicting adoption within 1-3 years.

Interestingly, participants from APAC countries were the most pessimistic about cryptocurrency adoption. Although 50% see the possibility of crypto expansion in the region within 1-3 years, 8% believe it will never happen.

On a global level, the majority of participants (52%) see the highest probability of cryptocurrency adoption within 1-3 years.

What is holding back merchants from the adoption of cryptocurrencies?

Despite the numerous advantages, there are still some barriers that prevent merchants from implementing decentralized solutions. Lack of regulatory clarity has been cited as the main problem by 89% of participants. The report emphasizes that "when given the option for multiple responses, almost one-third of participants cited regulatory clarity exclusively — indicating no other perceived barriers to using blockchain for payments."

A similar study by Deloitte in 2022, which focused on senior retail executives found that more than 50% of participants did not accept digital currencies because there were no clear regulations, "including national guidance around holding digital assets, clarity about the tax implications of using digital currencies, and the ability to hold digital currencies in a bank account."

Read also: EU concludes work on sweeping crypto regulation, including caps on stablecoin transaction flow

In Ripple's study, 45% of company representatives have pointed out limited industry acceptance as another significant factor slowing down crypto transformation, while 32% are concerned about the accounting treatment of digital assets.

Fewer participants are worried about protecting their customers from cryptocurrency volatility (24%), requirements for technical investments (20%), and lack of leadership involvement (19%). Finally, 10% of payment company representatives are still unsure about the benefits of crypto adoption.

Customer attitude to crypto and sustainability chart
Source: Ripple

There is also a strong concern about the sustainability of cryptocurrencies. For 71% of participants out of 98% of those who are aware of the environmental threat posed by cryptocurrencies, low energy consumption is "very important" for cryptocurrency adoption.

"While we drive toward innovation, we cannot lose focus on other societal imperatives—notably, the need to reduce energy consumption and be stewards of the environment. Survey respondents see the potential utility of cryptocurrencies, and are appropriately interested in ensuring responsible use of the technology that is not detrimental to the planet," Luhtanen commented on the results of the survey.