Cryptocurrency Series : Crypto-currency payments for export

An untraceable digital tool for business development, cryptoassets are an innovative technology that allows companies using them to reduce banking fees and delays for their transactions. In the face of increasing regulation by governments and the European Union[1]and their appropriation by banks, this instrument could move from challenger à MaverickThis is a non-conformist trend.

European companies, especially small and medium-sized enterprises (SMEs) and French mid-sized companies (MSEs), have been strongly encouraged by their governments to expand their exports in search of the liquidity they could no longer easily find since the crisis generated by the anti-COVID measures[2]. In doing so, they have had to deal with a variety of banking difficulties: fees considered excessive, delays inappropriate and over-compliance. For example, a French company that imports cocoa for processing is often confronted with bank charges that are considered high for a transfer to Côte d'Ivoire. These are explained by a structural part linked to the costs of the bank but also to the local network. The said transfer will not take place without longer delays and without an increase in documentary requests. As a result, the cost of the raw product cuts into the margin and the delays disrupt production. The traditional banking channel then becomes a significant brake. This trend is particularly noticeable in demanding markets such as the authorised sectors of countries under sanctions or so-called "frontier" markets, i.e. markets with a high commercial potential but which do not yet provide sufficient liquidity and reliable financial networks.

The use of cryptoassets by businesses for these transactions is growing, with "Europe [being] the largest crypto-economy in the world, receiving some $1 trillion in crypto-currencies [in 2020], representing 25% of global activity. The US is the second largest region, with $750 billion in value received, or 18%."[3]. A crypto asset is a cryptographically generated digital asset issued peer-to-peer through a decentralised computer network. Credit balance verification, clearing and bookkeeping are performed by a multitude of decentralised trusted third parties, which are computers. Confirmation from all of them is required to validate the transaction. One of these third parties receives financial compensation at random.

The use of cryptoassets is proving to be almost instantaneous, more secure and, above all, much cheaper from a business perspective. Solutions are emerging to maintain these advantages in compliance with stablecoins regulated and promoted by the United States as well as with cryptoassets backed by the Chinese Central Bank. The volatility risk is offset by these stablecoinsThe European regulation announced (MiCA) seems to be restrictive despite the fact that it allows for traceability of digital assets. The announced European regulation (MiCA) seems restrictive despite the traceability provided by the BlockchainThe underlying technology of cryptoassets. Banks and other platforms are therefore rushing to integrate these products into their offer, promising to guarantee the compliance of operations with the PSAN registration of the Autorité des Marchés Financiers. The result is a MaverickThis is a real innovation but far from what was initially hoped for.

It is at this point in the evolution of the banking and financial market that cryptoassets take on a decisive geopolitical dimension. Cryptoassets, whether independent or issued by a central bank, challenge both the hegemony of the dollar and the effectiveness of US sanctions. On the one hand, they offer an alternative as a store of value, since most of these currencies cannot be printed,[4] and means of exchange, as they are decentralised and therefore not very permeable to political pressure. On the other hand, these currencies prevent the information feedback that would allow the United States to sanction easily. Washington therefore promotes the use of stablecoins dollar-backed and classified as securities and therefore framed by the Security and Exchange Commission (SEC). This would considerably strengthen the position of the dollar. China, notably through the Regional Comprehensive Economic Partnership, the largest free trade agreement in the world[5]In addition, the European Commission is gradually promoting the use of local currencies and, above all, central bank cryptoassets, which are capable of challenging the dollar's position while retaining state control and connection to the banking system.

The European Union, meanwhile, has been dithering over the desirability of an e-euro but seems to have taken the side of strict regulation of independent cryptoassets, at the risk of weakening their usefulness. Other jurisdictions, notably in Africa, have made considerable progress towards these central bank currencies[6]. Cryptocurrencies represent only a part of the cryptoassets that can facilitate transactions for French companies (NFT in particular). These, together with innovative instruments such as smart contractsThe potential is great for European businesses internationally. The potential is great for European companies internationally... if future regulation agrees to take this into account.

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