In this article, I’m going to explain ISO 20022, a new (launched in 2004) standard for financial messaging that is being rolled out in banks worldwide, and describe the cryptocurrencies that are compliant with this new financial messaging standard, which is being implemented by major financial systems across the world, including Federal Reserve’s Fedwire Funds Service and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) among others, listed below.
Financial Systems Implementing ISO 20022
- SWIFT: The Society for Worldwide Interbank Financial Telecommunication, which facilitates communication between financial institutions globally, has initiated a multi-year program to migrate its messaging systems to ISO 20022. The plan initially targeted November 2021 to start the coexistence period, with full transition expected by end of 2025.
- Federal Reserve and The Clearing House (USA): Both the Federal Reserve and The Clearing House, the entities responsible for the majority of domestic monetary transfers in the United States, have begun the process of adopting ISO 20022.
- European Central Bank (Eurosystem): The Eurosystem has implemented ISO 20022 for its TARGET2 system for high-value payments and its T2S (TARGET2-Securities) system for securities settlement.
- SEPA (Single Euro Payments Area): The SEPA initiative by the European Payments Council adopted ISO 20022 XML-based standards for credit transfers and direct debit transactions across the Eurozone.
- Bank of England (UK): The Bank of England has announced plans to migrate the UK’s high-value payment system (CHAPS) to ISO 20022.
- Reserve Bank of India: The RBI has adopted ISO 20022 messaging format for Real Time Gross Settlements.
- Payment Systems in Canada and Australia: Both countries have modernized their payment systems, adopting ISO 20022 as part of the process.
- Japan’s Zengin System: The Zengin System, Japan’s nationwide electronic funds transfer service, has adopted ISO 20022.
ISO 20022 is a universal standard for financial industry messaging developed by the International Organization for Standardization (ISO). It provides a common platform for the development of messages using a standardized approach, process, and methodology. The standard was created to streamline and improve cross-border and domestic payment communication.
Its impact on cryptocurrencies can be understood through the lens of improved interoperability, enhanced data richness, and regulatory compliance:
- Interoperability: ISO 20022 is widely adopted by traditional financial institutions globally. If a cryptocurrency system becomes ISO 20022 compliant, it means it can “speak the same language” as these traditional systems, thereby improving interoperability. It can lead to seamless data exchange between crypto and traditional financial platforms.
- Enhanced Data Richness: ISO 20022 messages are data-rich. They can carry a lot more information about a transaction compared to the older formats. This can benefit cryptocurrencies by enabling them to transmit more transaction-related information, enhancing traceability, and reducing the chances of errors or fraud.
- Regulatory Compliance: Regulators across the globe are scrutinizing cryptocurrencies and related technologies more than ever. By aligning with ISO 20022, cryptocurrencies can demonstrate a commitment to global standards and regulatory compliance, which can help foster trust with regulators, financial institutions, and end-users.
Remember, cryptocurrencies are essentially decentralized, and their development communities decide whether to adopt such standards. Ripple (XRP) is a well-known example of a crypto project that has touted its ISO 20022 compliance as a selling point. However, not all cryptocurrencies will necessarily see the same benefits, and the decentralized ethos of many cryptocurrencies may conflict with the notion of adhering to a central standard. The decision to be ISO 20022 compliant will likely be part of a broader strategic decision for each cryptocurrency project.
ISO 20022 Compliant Cryptocurrencies
The ISO 20022 standard specifies messaging for electronic data interchange between financial institutions. For a cryptocurrency to be compliant with ISO 20022, it means that systems or platforms that facilitate transactions with that cryptocurrency would need to integrate ISO 20022 messaging standards into their operations.
With that explanation behind us, here is the list of crypto coins that are ISO 20022 Compliant.
XRP is a digital asset and cryptocurrency that was created by Ripple Labs Inc., a technology company that specializes in the real-time gross settlement system, currency exchange, and remittance network. XRP is used in Ripple’s payment ecosystem, and it’s designed to facilitate faster, more secure cross-border transactions.
Overview of XRP
- Fast and Low Cost: XRP is designed to enable extremely fast payments; transactions can settle in as little as 3-5 seconds, which is much faster than most cryptocurrencies. It also has lower transaction fees compared to traditional banking systems and even other digital currencies.
- Bridge Currency: XRP is used as a bridge currency in the Ripple network. If one wants to convert one currency to another (for example, USD to EUR), and there’s no direct market for this pair, XRP can be used to facilitate the transaction.
- Supply: Unlike Bitcoin and many other cryptocurrencies, XRP tokens were pre-mined, meaning that all the tokens that will ever exist have already been created. A portion of these tokens were retained by Ripple Labs, with the remainder distributed or sold to the public.
- RippleNet: XRP is used in RippleNet, Ripple’s global payments network. RippleNet offers a single, standardized infrastructure for consistency across all connections, while the use of XRP as an optional bridge currency aims to provide liquidity and facilitate value transfer between different fiat currencies.
XRP ISO 20022 Compliance
Ripple’s adoption of the ISO 20022 standard sets it apart in the world of cryptocurrencies. This compliance provides a number of benefits:
- Interoperability: ISO 20022 is a universal financial industry messaging standard used by payment systems in several countries. XRP’s compliance allows it to seamlessly interact with these traditional financial systems.
- Rich Data: ISO 20022 messaging can carry far more information than other standards. This allows for more transparent and effective compliance checks, and enhances transaction efficiency by reducing manual intervention.
- Future Proofing: Major financial networks and infrastructures around the world are transitioning to ISO 20022. By being compliant, XRP is positioned to be compatible with the future of financial messaging, potentially giving it an advantage in adoption by financial institutions.
- Reduced Risk: Standardization reduces the risk of errors in communication between different systems, making transactions more secure.
Stellar Lumens (XLM) is the native digital asset of the Stellar network, which is an open-source, blockchain-based distributed ledger technology (DLT) platform. Stellar, developed by the Stellar Development Foundation, focuses on enabling fast and low-cost cross-border transactions.
Overview of XLM
- Fast and Affordable: Stellar transactions confirm in a matter of seconds and the transaction costs are nominal. This makes Stellar an ideal network for small transactions, micropayments, and international money transfers.
- Multi-Currency Transactions: Stellar’s protocol has a built-in mechanism for performing transactions between different currencies. The Stellar network can facilitate exchanges between any pair of currencies, making it highly versatile.
- Supply: Stellar Lumens were pre-mined, similar to XRP. The Stellar Development Foundation periodically distributes these lumens through various mechanisms like direct signup programs, partnerships, and airdrops.
- Stellar Network: Stellar’s network is used by a variety of entities, ranging from businesses to nonprofits. It allows users to create, send, and trade digital representations of all forms of money: dollars, pesos, bitcoin, etc.
XLM ISO 20022 Compliance
XLM’s compliance with the ISO 20022 standard gives it the following benefits as a cryptocurrency:
- Enhanced Multi-Currency Transactions: Stellar’s built-in mechanism for performing transactions between different currencies is enhanced by ISO 20022 compliance. The rich, structured data provided by ISO 20022 improves the efficiency and reliability of these multi-currency transactions, ensuring that all necessary information for each currency exchange is accurately communicated.
- Strengthening Stellar’s Value Proposition: Stellar’s value proposition lies in its ability to facilitate fast, low-cost cross-border transactions. ISO 20022 compliance aligns closely with this value proposition by enabling seamless interaction with traditional financial systems that are increasingly adopting the standard.
- Improving Distributed Exchange Functionality: Stellar includes a distributed exchange functionality that allows users to send payments in specific assets, even if they hold a different asset in their account. Compliance with ISO 20022 enhances this functionality by ensuring the efficient communication of payment information between different assets, reducing errors and further facilitating Stellar’s unique multi-asset transactions.
- Expanding Partnership Opportunities: Many financial institutions and fintech companies are transitioning to ISO 20022. As Stellar aims to bridge the gap between these entities and the blockchain world, compliance with ISO 20022 enhances Stellar’s appeal to these potential partners, leading to more integrations and wider adoption of the Stellar network.
- Nonprofit Sector Benefit: Stellar’s platform is commonly used by nonprofits and development projects that need to send funds efficiently to different parts of the world. ISO 20022’s rich data capabilities help these organizations track transactions more effectively, enabling better auditing and accountability.
Quant Network is a technology company that developed Overledger, an operating system that facilitates the development of decentralized, multi-chain applications (also known as MApps). Its associated cryptocurrency token is QNT.
Overview of Quant and QNT
- Interoperability: Overledger, Quant’s flagship product, is designed to enable interoperability across different blockchains, allowing developers to build applications that utilize multiple blockchains at the same time. This is a key feature that sets Quant apart, as many existing blockchain platforms operate in isolation from one another.
- Overledger Network: This is Quant’s ecosystem for multi-chain apps (MApps), which allows developers to build applications on top of different blockchains. By using the Overledger network, these MApps can read and modify data and transactions across multiple blockchains.
- QNT Token: The QNT token is used as the fuel for the Overledger ecosystem. It provides access to the network, and is also used for transaction fees, and to incentivize the community. Unlike other cryptocurrencies, QNT tokens were not mined, but were instead sold in an initial coin offering (ICO) in 2018.
- Enterprise Focus: Quant’s solutions are designed with a focus on enterprise use cases. They provide the infrastructure for enterprises to adopt blockchain technology and to develop multi-chain applications.
Quant ISO 20022 Compliance
- Enhanced Interoperability: Given that Overledger’s main feature is its ability to enable interoperability across different blockchains, ISO 20022 compliance enhances this further. This makes Overledger more attractive to financial institutions and other entities transitioning to the ISO 20022 standard.
- Enterprise Adoption: Quant targets enterprise clients for their product. As these businesses are likely to comply with global standards like ISO 20022, Quant’s compliance with this standard boosts its adoption among these enterprises.
- Multi-Chain Transaction Efficiency: ISO 20022 compliance facilitates more efficient multi-chain transactions within the Overledger network, given ISO 20022’s rich and structured data format.
- Expanded Network: The move towards ISO 20022 is global, and by complying, Quant opens doors to partnerships and integrations with various global financial institutions that are adopting this standard.
Algorand is a unique blockchain platform designed to solve some of the key challenges facing older blockchains: decentralization, security, and scalability. It was developed by Silvio Micali, a Turing Award-winning cryptographer, and its native cryptocurrency is known as Algo (ALGO).
- Pure Proof of Stake: Algorand operates using a consensus algorithm called Pure Proof of Stake (PPoS), where the users’ influence on block production and validation is proportional to their stake in the network (i.e., the number of ALGO they hold). This ensures a fair and open network and addresses scalability without compromising security.
- Instant Transaction Finality: Algorand offers instant transaction finality, which means there are no forks and no fear of potential rollbacks, which can be an issue in some other blockchain networks. This feature provides confidence for businesses and developers that once a transaction is written to the blockchain, it is final.
- Open Source: The Algorand platform is fully open source, allowing developers worldwide to contribute to its development and progress.
- ALGO Token: The ALGO token serves as the native cryptocurrency of the Algorand network. It’s used for transaction fees, participation in consensus, and rewarding participants.
ALGO ISO 20022 Compliance
ALGO’s compliance with the ISO 20022 standard gives it the following advantages:
- Greater Integration with Traditional Financial Systems: Given Algorand’s focus on creating a scalable, secure, and decentralized network, ISO 20022 compliance enhances integration with existing financial institutions and payment systems, fostering more widespread adoption and utility of the Algorand platform.
- Support for Advanced Features: ISO 20022’s rich, structured data format could potentially support advanced features on Algorand’s blockchain, including more sophisticated smart contracts and dApps.
- Attracting Institutional Investors: ISO 20022 is becoming a standard in the financial industry. By aligning with this standard, Algorand positions itself as an attractive option for institutional investors, potentially leading to increased demand for ALGO tokens.
- Enhancing Trust and Confidence: Achieving compliance with a widely accepted global standard like ISO 20022 increases trust and confidence in the Algorand platform among developers, users, and potential partners.
Hedera Hashgraph (HBAR)
Hedera Hashgraph (HBAR) is a public network that uses hashgraph consensus, a novel form of distributed ledger technology. Developed by the company Hedera, the native cryptocurrency for the network is called HBAR.
Here are some of the most prominent features of HBAR:
- Hashgraph Consensus: Hedera Hashgraph stands out due to its unique consensus mechanism. Unlike blockchain technology, which uses a series of blocks to record transactions, Hedera uses a graph-like structure to achieve consensus quickly and securely. This approach is designed to facilitate high-throughput, low-latency transactions.
- High Performance: The Hedera network can process hundreds of thousands of transactions per second due to its unique structure and consensus mechanism, making it one of the fastest networks available for transaction processing.
- HBAR Token: HBAR is the native cryptocurrency of the Hedera network. It is used to power decentralized applications, build peer-to-peer payment and micropayment business models, and protect the network from malicious actors.
- Governance Model: Hedera has a unique governance model. It’s governed by the Hedera Governing Council, which consists of up to 39 multinational entities from various industries. This approach is intended to ensure decentralization and stability.
HBAR ISO 20022 Compliance
HBAR’s compliance with ISO 20022 provide it the following advantages:
- Broad Compatibility: ISO 20022 compliance broadens Hedera’s compatibility with existing financial systems, potentially making it even more attractive to businesses and institutions that require high-throughput transaction processing.
- Support for Sophisticated Transactions: The rich, structured data format provided by ISO 20022 enhances the sophistication of transactions on the Hedera network, including those involving smart contracts or complex multi-party transactions.
- Boosted Reputation: By adhering to a global standard like ISO 20022, Hedera boosts its reputation in the financial industry, potentially attracting more developers and partners to its platform.
- Streamlining International Payments: As a fast and secure network, Hedera further streamlines and secures international payments by complying with the ISO 20022 standard, which is widely used for such transactions.
IOTA is a unique, open-source distributed ledger technology (DLT) platform that does not use a blockchain. Instead, it utilizes a novel technology called the Tangle. IOTA’s native digital currency is called MIOTA.
Here are the prominent features of the IOTA network:
- The Tangle: IOTA uses a technology called the Tangle, which is a type of Directed Acyclic Graph (DAG). In this structure, transactions are linked to each other in a web, and each transaction is required to validate two previous transactions. This eliminates the need for miners or staking, which are common in blockchain-based cryptocurrencies.
- Feeless Transactions: Due to its unique structure, IOTA allows for transactions to be processed without any fees. This makes it particularly suitable for microtransactions and data transfers in the Internet of Things (IoT) context, a major focus area for the project.
- Scalability and Speed: The Tangle is designed to scale and become faster as more participants use the network. This is in contrast to traditional blockchain networks, which can become slower and more expensive as they scale.
- Quantum Resistance: IOTA claims to be quantum-resistant, meaning it is designed to be secure even in the event of quantum computers becoming commonplace, a feature that distinguishes it from many other digital currencies.
IOTA ISO 20022 Compliance
These are the advantages for IOTA being compliant with ISO 20022. Here are some of the most important:
- Enhancing IoT Potential: ISO 20022’s rich data structure enhances IOTA’s functionality in IoT applications, where detailed and varied data is often exchanged.
- Broad Compatibility: Compliance with ISO 20022 enables broader compatibility with existing financial systems, making IOTA more attractive to financial institutions and businesses that require efficient and secure data transfer.
- Increased Trust: By adhering to a globally recognized financial standard like ISO 20022, IOTA increases trust and confidence in its platform among potential users, developers, and partners.
- Standardization Benefits: ISO 20022 provides a standardized approach to data transmission, which reduceß errors and enhance efficiency in IOTA’s network, particularly when used for complex applications like IoT.
XDC Network (XDC)
XinFin Digital Contract (XDC) is the native fuel of XinFin Network, a hybrid blockchain platform optimized for international trade and finance. The XDC protocol is designed to support smart contracts, 2000TPS, 2 seconds transaction time, KYC to masternodes (validators), and interoperability through the use of XDCE bridge contracts.
Here are some of the prominent features of XDC that characterize the coin and its blockchain network.
- Hybrid Blockchain: The XinFin Network is a hybrid blockchain platform that combines the best features of private and public blockchains. This allows it to provide a highly efficient and scalable infrastructure for secure and permissioned transactions that meet the requirements of enterprise-grade financial institutions.
- XinFin Delegated Proof of Stake (XDPoS): XinFin employs a Delegated Proof of Stake (DPoS) consensus mechanism, which is designed to provide high transaction speed and low fees. This is especially suited for use cases in trade and finance where quick settlement is a critical requirement.
- XDC Token: The XDC token is used as the underlying fuel for transactions in the XinFin Network, just like Ether is used for Ethereum. XDC tokens are also used as a staking mechanism for participating in the network’s consensus mechanism.
- TradeFinex Platform: XinFin also powers TradeFinex, a peer-to-peer trade finance platform that connects beneficiaries, suppliers, and financiers globally. It’s designed to solve the inefficiencies in the existing trade finance system and democratize global trade.
XDC ISO 20022 Compliance
XDC’s compliance with the ISO 20022 standard provides for it the following benefits as a cryptocurrency:
- Greater Integration with Traditional Financial Systems: ISO 20022 is increasingly being adopted by global financial institutions for cross-border transactions. Compliance with this standard allows the XinFin Network and its XDC token to integrate more easily with these traditional financial systems, fostering more widespread adoption.
- Support for Advanced Features: ISO 20022’s rich, structured data format can support advanced features on the XinFin Network, including more sophisticated smart contracts and decentralized applications (dApps).
- Increased Trust and Confidence: Achieving compliance with a widely accepted global standard like ISO 20022 could increase trust and confidence in the XinFin Network among potential users, developers, and partners.
- Streamlining International Trade Finance: The ISO 20022 standard is widely used for international trade finance transactions. Compliance with this standard could potentially make the XinFin Network’s TradeFinex platform more efficient and reliable for these transactions.