The ISO 20022 compliant cryptocurrencies will form the backbone of the New Financial System, replacing the legacy 50-year-old SWIFT payment system.
This will be a new international blockchain-based financial payment system for global central banking and support international and cross-border payments around the world.
ISO 20022 protocol is a standard for electronic data interchange between financial services in the payment industry. It is based on DLT (distributive ledger technology)
and uses ISO 20022 as a messaging mechanism… ISO 20022 is a more advanced format based on the XML protocol and the Abstract Syntax Notation One.
ISO (International Organization for Standardization) is a non-governmental global organization based in Geneva, Switzerland. ISO develops international
standards for industrial, commercial, and proprietary use.
If an ISO standard is established, virtually all financial institutions in the world adopt it. An ISO code for Bitcoin (BTC) could facilitate global mainstream
adoption more than any other action.
ISO has largely ignored cryptos until the last few years, when CDBCs (Central Bank Digital Currencies) started gaining momentum. Currently, financial institutions rely on the ISO 4217 standard to identify currencies for global transactions.
For example, the US Dollar is assigned the code “USD” in this standard. Given the lack of ISO codes in the crypto world, cryptos currently use unofficial ISO codes, such as “XBT” for Bitcoin. However, in the new “ISO 20022” standard, cryptos could be assigned ISO codes if they are compliant with ISO 20022.
This could lead to adoption by centralized banks and enable cross-border crypto payments through centralized financial institutions.
For cryptos to be classified as legitimate currencies by ISO, they have to both comply with new standards in global financial systems and have an ISO code that doesn’t conflict with existing codes.
The ISO 20022 standard will set a new standard of communication for all financial institutions worldwide. The 20022 standard will completely change the financial landscape and improve international money transfers.
Europe will transition to ISO 20022 towards the end of 2022, and the US will implement it in 2023.
Cryptos that update their blockchains to comply with this new ISO standard will likely appreciate in price if they are chosen for payments by banks.
The new ISO 200222 standard will be used for global payment systems, message exchanges (messaging formats), trading, and other activities. It defines changes such as encoding data in XLM format and new digital token identifiers. It was developed by the “Registration Management Group,” which comprises 37 of the world’s largest financial players, including Ripple (XRP). Ripple’s vice president claims that Ripple already complies with ISO 20022 and together with RippleNet will be the first crypto company that is ready for the new global financial standard.
SWIFT, the global messaging network that banks use to send funds internationally, will be entirely updated to ISO 20022 near the start of 2023. Its original format will no longer be used at all by 2025.
Bank payments around the world, whether they’re made in JPY at the Bank of Japan, or EUR in Deutsche Bank, will follow the same payment protocol. This opens up an opportunity for cryptos that are compatible with the new standard to be included in the update.
The 20022 ISO update could give certain cryptos the advantage of being ISO-compliant and chosen by banks for crypto payments. While the blockchain community often criticizes centralized bank services as slow and outdated, this update could signal they’re ready for change.
To be compliant, a crypto blockchain would have to fulfill all the SWIFT communication requirements, including the ability to pass customer data on the blockchain. This will increase safety for customers using centralized banks to send decentralized crypto.
So far, the only two compatible cryptos are Ripple’s XRP (XRP) and Stellar Lumens (XLM). It’s rumored that cryptos like MIOTA (IOTA) and Algorand (ALGO) are also compliant. However, Ripple is the only crypto player that’s officially part of the ISO 20022 management group.
What qualifies Ripple to be a member of this group along with such major players as Visa and MasterCard? Ripple is currently the second-largest fintech company in the United States, only falling behind Stripe. Ripple’s crypto, XRP as well as Stellar Lumens’ crypto XLM (both created by Jed McCaleb) are both designed to move money at a very fast speed and very low cost. The average XRP transaction (tps) settles in three seconds, compared to 45 minutes for Bitcoin.
The main difference between these two cryptos is that XRP is geared towards the banking sector, and XLM is geared towards governments and digital currencies. For one, Ukraine chose XLM to build its official digital currency (CDBC).
This is the Standard ICC will obtain by 2023.