ISO 20022 Adoption Opens Doors for XRP and XLM, Aligning with Traditional Finance and Blockchain Technologies

The Bank for International Settlements (BIS) has endorsed ISO 20022 as a standardized messaging protocol for digital asset transactions. XRP and XLM are well-positioned to benefit from this adoption due to their focus on fast, low-cost international payments. The integration of ISO 20022 with digital assets enhances interoperability and supports innovative financial applications, including blockchain-based payment systems. Other digital assets like XDC, ALGO, HBAR, QNT, and ADA are also candidates for ISO 20022 compatibility, and the adoption of the protocol represents a transformative development in the convergence of traditional finance with blockchain technologies.

The Bank for International Settlements (BIS) has recently endorsed ISO 20022 as the standardized messaging protocol for digital asset transactions, marking a significant milestone in the convergence of traditional finance and blockchain technologies [1]. This move is expected to benefit several digital assets, particularly those focused on fast, low-cost international payments, such as XRP and XLM [2].

ISO 20022's adoption in digital asset transactions enhances interoperability and supports innovative financial applications, including blockchain-based payment systems [1]. The integration of this international standard with digital assets addresses the fragmentation of payment messaging standards, a key contributor to frictions in cross-border payments [1].

The BIS Committee on Payments and Market Infrastructures (CPMI) and the private sector global Payments Market Practice Group (PMPG) collaborated on harmonized data requirements for ISO 20022 messages in cross-border payments [1]. These data requirements establish a consistent minimum set of data to be used in a cross-border payment transaction end to end, reflecting intensive technical discussions by payment practitioners and extensive consultation with industry [1].

Several digital assets, including XDC, ALGO, HBAR, QNT, and ADA, are also candidates for ISO 20022 compatibility [2]. The adoption of this protocol represents a transformative development in the digital asset and cross-border payments landscape, with benefits extending to improved cross-border payment efficiency, enhanced security, and the promotion of innovative financial applications.

Market participants are encouraged to begin preparations to align with the harmonized ISO 20022 data requirements in earnest and by end-2027 at the latest [1]. The realization of the benefits from adopting these requirements will depend on their widespread uptake, fostering the implementation of consistent data requirements as the payments landscape evolves.

References:
[1] Bank for International Settlements. (2023, March 27). Harmonised data requirements for ISO 20022 messages for cross-border payments. Retrieved from https://www.bis.org/cpmi/publ/d218.htm
[2] Fintech News Singapore. (2023, March 28). BIS publishes new ISO 20022 data requirements for cross-border payments. Retrieved from https://fintechnews.sg/78989/payments/bis-publishes-new-iso-20022-data-requirements-for-cross-border-payments/