Financial institutions and systems worldwide are constantly trying to facilitate data sharing, aiming for faster, more organized, and more cost-effective international transactions.
One important solution is to adopt the ISO 20022 standard. This standard is a standardized approach to messaging for financial institutions. It promises improved communication, security, and reliability across different platforms and between external systems.
In this article, we will explore the benefits of implementing ISO 20022 for crypto projects and examine some coins that comply with this standard.
What is ISO 20022?
ISO 20022 is a standard developed by the International Organization for Standardization (ISO) for the exchange of electronic payment information between banks. Its goal is to unify all existing message formats into a single language called Extensible Markup Language (XML), which makes data processing easier.
This standard covers methods for creating business models, rules for describing business processes, and procedures for designing schemes and message formats, including their descriptions.
It also governs the process of publishing documentation in accordance with the standard and outlines the fundamental rules for maintaining it. The initial version of the protocol was introduced in 2008.
SWIFT is the authorized body responsible for registering and maintaining ISO 20022.
The transition from SWIFT to ISO 20022 will impact the cryptocurrency sector. Coins that comply with this standard will be adopted by the traditional financial system.
If major projects like Bitcoin and Ethereum adopt ISO standards and integrate into SWIFT, it could significantly change the relationship between the cryptocurrency and fiat currency ecosystems.
What makes ISO 20022 important?
The ISO 20022 standard allows compliant cryptocurrencies to receive ISO codes, which could encourage banks to adopt them and boost cross-border crypto payments through these institutions.
As a result, this system is excellent for fast payments, managing daily cash flow, checking compliance, and preventing fraud. By standardizing messaging, ISO 20022 helps make transactions more efficient, reducing costs and processing time. This enhances security by reducing errors and fraud.
Top 8 ISO-20022 compliant coins
Eight crypto coins already meet the ISO 20022 standard: XRP, Stellar Lumens, XDC Network, Algorand, Iota, Hedera Hashgraph, Quant, and Cardano. Two of them—XRP and XLM— are also members of the ISO 20022 standardization body.
Ripple (XRP)
Ripple (XRP) is a cryptocurrency and digital payment protocol that aims to simplify global financial transactions. XRP uses the Ripple Protocol Consensus Algorithm (RPCA), which lets trusted nodes handle fast and efficient transactions without energy-heavy mining.
Ripple works on fast, cross-border payments and money transfers, giving banks and financial institutions a cheaper option than the traditional Swift network. XRP is a bridge currency in the Ripple network that helps exchange value easily between different fiat currencies.
RippleNet is a global network that connects banks and payment providers for secure and quick transactions. Its Interledger Protocol (ILP) reduces settlement times and transaction costs while enhancing financial institutions' transparency and liquidity management.
Stellar (XLM)
Stellar (XLM) is a cryptocurrency and decentralized payment platform that enables fast, low-cost cross-border transactions and promotes financial inclusion. This platform is based on the Ripple protocol and links banks, payment processors, and users worldwide.
Stellar uses the Stellar Consensus Protocol (SCP) to quickly confirm transactions through a network of trusted nodes, eliminating the need for resource-heavy mining.
The Stellar network uses Lumens (XLM) as a bridge asset to exchange value between different currencies and boost cross-border transactions. Lumens prevent spam attacks and secure the network.
Stellar focuses on small payments and creates digital assets through its decentralized exchange. It works well for money transfers and tokenized assets and gives people in unbanked areas better access to financial services.
Cardano (ADA)
Cardano (ADA) creates a safe and efficient environment for building dApps and smart contracts. It improves on older blockchains and focuses on scalability, sustainability, and interoperability. This network has two main parts: the Cardano Settlement Layer (CSL) for crypto transactions and the Cardano Computation Layer (CCL) for running smart contracts. The network is kept secure through a Proof-of-Stake method called Ouroboros, which allows users to earn rewards through staked ADA coins.
Hedera (HBAR)
Hedera Hashgraph (HBAR) uses the Hashgraph consensus method to provide high speed, security, and fairness. It supports building and running decentralized apps (dApps) in finance, supply chain, gaming, and social networking.
Instead of a traditional blockchain, Hedera uses a directed acyclic graph (DAG) to reach consensus quickly, allowing fast transactions with low energy use.
HBAR is the network's coin, used to pay transaction fees, secure the network through staking, and participate in decision-making. Its fixed supply and deflationary system help maintain its value.
IOTA (MIOTA)
IOTA (MIOTA) is a cryptocurrency and ledger system designed for the Internet of Things (IoT). The IOTA Foundation has recently proposed a major update called "IOTA Rebased". This upgrade transforms the network from a Layer 1 system based on the IOTA blockchain to a Move-based object ledger.
The main goal of the change is to make the network more scalable, decentralized, and programmable. This means that developers can create various decentralized applications (dApps) directly on the main network.
IOTA plans to implement smart contracts at the Layer 1 level by incorporating the Move programming language into the system. This will make it easier to use the blockchain for applications in various fields, such as supply chain management, asset tokenization, and digital identity systems.
This move puts IOTA on par with other blockchains like Sui and Aptos, which also use Move.
Although the adoption of the Move programming language and the proposed network upgrade may increase IOTA's flexibility and scalability, they should not affect its ISO 20022 compliance.
XDC Network (XDC)
XDC Network (XDC) is a blockchain platform for secure and efficient cross-border transactions, trade finance, and supply chain management. XDC is built on the XinFin Hybrid Blockchain, which combines features of public and private blockchains to create a flexible and connected system.
XDC Network uses XDPoS—XinFin Delegated Proof of Stake—to ensure quick transaction confirmations while keeping the network secure and decentralized.
The XDC token is used to pay for transactions, access services on the platform, and participate in network decision-making. XDC focuses on practical uses, especially in trade finance and supply chain management.
Algorand (ALGO)
Algorand (ALGO) is a blockchain platform that allows developers to build decentralized apps (dApps). Its Pure Proof of Stake (PPoS) confirms transactions quickly while keeping the network decentralized.
Unlike older systems that rely on mining, Algorand's PPoS gives users an equal chance to create and check new blocks, making the network safer and less resource-heavy.
The ALGO network uses the Algorand coin to exchange and confirm transactions and earn rewards. Algorand handles many transactions quickly and cheaply, making it ideal for financial services, decentralized finance (DeFi), and asset tokenization.
The platform provides a secure and efficient blockchain, making it a top contender in the space. Algorand aims to improve transaction speed and scalability and encourage new ideas in the decentralized world.
Quant (QNT)
Quant (QNT) was created to improve the interaction between different blockchains and traditional financial systems.
Overledger, the base platform, allows for cross-chain transactions, data sharing, and the development of decentralized applications (dApps) on multiple blockchains. This technology enables blockchains to communicate and exchange value securely and efficiently, enhancing the entire industry's scalability, liquidity, and functionality.
The QNT token is the native coin used to pay transaction fees, access Overledger services, and reward network participants who help maintain the network. With a fixed supply, QNT has a deflationary aspect, which adds to its value.
Benefits of ISO 20022 compliance for crypto
Compliance with ISO 20022 offers several benefits for the crypto industry, including:
Standardization and interoperability
Financial institutions must follow ISO standards to ensure smooth communication and secure fund transfers between different networks. This is essential for integrating cryptocurrencies into the financial system.Integration with Central Banks
Compliance encourages central banks and financial institutions to use cryptocurrencies. Ripple (XRP), XDC, Stellar Lumens (XLM), Iota, and Algorand are already ISO 20022 compliant, which boosts their potential for adoption as digital reserve currencies or integration into central bank payment systems.Streamlined cross-border payments
ISO 20022 can help us achieve faster and cheaper payment processing, reduce friction, and improve the efficiency of international transactions.Improved trust and transparency
ISO 20022 compliance promotes trust and transparency in the crypto industry by providing a structured format for payment messages, reducing errors and misinterpretations. This standard increases clarity, reduces fraud risks, and improves the security of crypto transactions.
The impact of ISO 20022 compliance on the crypto industry is still being evaluated. As more companies adopt ISO 20022, we will gain a better understanding of its full range of benefits.
FAQ: ISO-20022 coins
- Which coins will run on ISO 20022?
Coins like XRP, XLM, XDC, ALGO, and IOTA are aligned with ISO 20022 due to their focus on interoperability and financial messaging standards. They aim to support efficient and compliant cross-border transactions.
- Are ISO 20022 coins a good investment?
ISO 20022-compliant coins may offer long-term potential due to their focus on institutional adoption and integration with financial systems. However, investments should be based on thorough research and individual risk tolerance.
- Is Bitcoin ISO 20022?
Bitcoin does not directly align with ISO 20022, as it was not designed to comply with financial messaging standards. It remains primarily a store of value and decentralized digital currency.
- What is ISO 20022 currency?
ISO 20022 currency refers to cryptocurrencies that support or integrate with the financial messaging standard to enable seamless data exchange and interoperability in banking systems. Examples include XRP and XLM.
- Does ISO 20022 use XRP?
Yes, XRP is a prominent cryptocurrency aligned with ISO 20022, focusing on cross-border payments and integration with financial institutions.
- What banks use ISO 20022?
Major global banks, including HSBC, Deutsche Bank, and JP Morgan, are transitioning to or already using ISO 20022 for enhanced financial messaging and interoperability.
- Which coin is best for the future?
The best coin depends on individual goals, but ISO 20022-compliant coins like XRP, XLM, and ALGO are often seen as promising for institutional adoption. Bitcoin and Ethereum also remain strong contenders for broader use cases.
- Does ISO 20022 use blockchain?
ISO 20022 is not a blockchain technology but a messaging standard. Some blockchain projects align with it to improve interoperability and integration with financial systems.
- How do I buy ISO 20022 coins?
ISO 20022-compliant coins can be purchased on popular crypto exchanges or in secure cold wallets like Tangem. Always store your purchased coins in a secure wallet after trading.
- Is Ethereum ISO 20022?
Ethereum is not natively ISO 20022-compliant but could align with the standard through third-party applications or integrations.
- Who needs ISO 20022?
Banks, financial institutions, and payment service providers use ISO 20022 to modernize and standardize financial messaging. It benefits industries requiring seamless and interoperable data exchange.
- Is XRP a good investment?
XRP’s focus on institutional adoption and cross-border payments gives it growth potential, but its investment risk depends on market conditions.
- What countries are in ISO 20022?
ISO 20022 is adopted globally, with countries like the U.S., U.K., members of the European Union, Australia, and Japan actively implementing it in their financial systems.