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(Kitco News) - As institutional investors begin to show increasing interest in digital assets, a recent survey conducted by Ripple found that over 90% of global financial leaders believe that blockchain technology will significantly impact business and finance in the next three years, representing a notable turn-around in their confidence in the cryptocurrency space over the past six months.
Ripple released the survey findings in the “2023 New Value Report: Crypto Trends in Business & Beyond” as a way to help global enterprises and financial institutions “be able to identify, define and demystify primary topics, trends and technologies to help pave the way forward for partners, customers and the industry at large.”
The survey focused on investigating “the extent to which global finance leaders are aware of, interested in, and exploring crypto as a utility tool and how it’s driving real business value for financial institutions, enterprises and their customers across: decentralized finance (DeFi); tokenization and non-fungible tokens (NFTs), central bank digital currencies (CBDCs); payments; custody; and compliance.”
Ripple found that 88% of the decision-makers in global finance believe that crypto and blockchain will have either a significant or massive impact on business, finance, and society over the next three years.
Respondents in Latin America (LATAM) were the most bullish on enterprise and institutional use of crypto for business, followed by the Middle East and North Africa (MENA), then North America (NA), Asia Pacific (APAC) and Europe, Middle East and Africa (EMEA).
“Over half of global respondents cite already having a cryptocurrency solution in place at their company, or are in the process of implementing one,” the report said. “Upwards of three-quarters indicate an openness to using or exploring other crypto technologies over the next few years (e.g. CBDCs, stablecoins, NFTs, etc.).”
These findings show that the vast majority of global finance leaders have confidence in crypto, and those with more experience or expertise with the technology are the most optimistic about the sector, having experienced firsthand the benefits of blockchain technology.
“While each technology offers its own unique benefits, some core themes are woven throughout,” the report said. “Benefits that emerge across many of these technologies include: enhanced data security and privacy, improved automation and speed, financial flexibility and availability, and the ability to tap into new revenue streams or market opportunities.”
Despite the overall positive outlook, respondents also highlighted areas of uncertainty, which include concerns about privacy, risk management, price volatility and the lack of clear regulation.
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Impact of tokenization
The survey also found that most decision-makers in the space anticipate tokenized assets – including CBDCs, stablecoins, and NFTs – will have “meaningful impacts” across business, finance, society, and specific use cases or industries.
“Compared to last year, respondents expect greater impact from CBDCs and stablecoins in less time,” the report said. “Cross-border payments and consumer-to-business payments are the top two most highly ranked use cases for both CBDCs and stablecoins.”
The use of NFTs for business in the metaverse and events/ticketing is one area where enterprises are particularly bullish, Ripple added.
Crypto payments rising
When it comes to payments, the survey found that finance leaders “are more confident in cryptocurrencies to meet their business needs than they are traditional currency.”
“Ease of use is far and away the most important requirement for organizations to enable customers to pay with crypto,” the report said. “Faster payments/settlement times and cost savings are the biggest value propositions for incorporating crypto into cross-border payments for enterprises and payments/treasury professionals at financial institutions – regardless of region and level of familiarity with crypto.”
According to respondents, the top reasons to hold a cryptocurrency are for use as a currency for making payments and as a hedge against inflation. The biggest roadblocks to borrowing, raising capital and making cross-border payments were interest rates and cost-related concerns.
One sector of the market that is of particular interest to institutions is decentralized finance (DeFi), as “Government-backed financial institutions around the world are exploring institutional DeFi to tap into market potential, free up liquidity and save costs with faster settlement,” Ripple said.
“The vast majority of global respondents expect significant or massive impact of DeFi practices and protocols across all areas measured,” the report said.
Confidence remains high despite the struggles of 2022
The survey found that sentiment remains high despite the struggles that the industry faced in 2022, and “there are many clear indicators to signal that favorability toward, and confidence in, the industry has not been shaken in the long run.”
“This suggests that any uncertainty was influenced by a few bad actors as opposed to the underlying technologies themselves,” the report said.
Two-thirds of respondents said their confidence in cryptocurrency solutions for business has increased over the past 12 months, and nearly three-quarters said their confidence in the broader crypto industry has increased over the past six months.
“Crypto elicits an overwhelmingly positive emotional response, with 77% of finance decision-makers feeling either excited, optimistic, or confident,” the report said.
“When we look back at where crypto and blockchain were a year ago and where we are today – given the accelerating pace of innovation and powerful signs of adoption – we can’t help but agree that these technologies will have [a] profound impact in the months and years to come,” Ripple said. “And, with clear regulation and applicable compliance guidance across jurisdictions, we will undoubtedly see newfound functionality and applications of the technology emerge.”
