Digital currencies offer an ideal opportunity for broader, more equitable inclusion in the global financial ecosystem. With an estimated 1.7 billion around the world who do not have a bank account, this represents a major opportunity for banks, venture capitalists, investors and other stakeholders to tap into.

“Financial inclusion is extremely top-of-mind for all of us. It is absolutely a priority for us on a global scale,” said Dr Saeeda Jaffar, GM of Visa in the GCC in the recent roundtable discussion ‘Payment Infrastructure Evolution in the UAE’, hosted by Fintech Surge and led by Saqr Ereiqat, Managing Director of Riddermark.

Dr Jaffar explained that ‘financial inclusion’ referred to two main groupings: The roughly two billion unbanked (“We all know the challenges and issues that they face. We have embarked on a concerted effort with a lot of the fintechs, mobile network operators, etc. to try and bring those into the financial fold”) and then an estimated 100 million merchants globally that do not have access to financial services.

The latter operate in a micro space. “It is as much about bringing them into the mix and making sure that they are also part of the financial network. It is about ease of access, cost of acceptance, about making sure that we are able to help them create value so that they can sustain themselves,” said Dr. Jaffar.

A major challenge in this regard is regulation, said Ralf Glabischnig, founder of Crypto Oasis and the crypto venture capital firm CV VC. “Regulation is not global. Regulation is local and the cost of compliance is racing ahead. Instead of banking the unbanked, people are losing bank accounts due to the rising cost of compliance.”

Related to this issue is what constitutes a cryptocurrency in the first place. These are essentially ‘digital currencies’, said Dr Jaffar. “There are bitcoins, where there is a lot more price volatility and where so far the use cases have been around investing. The second leg of digital currencies are stablecoins, typically linked to some kind of commodity or fiat currency.” Here a common example is USD Coin (USDC), which tends to be much more stable with a lot more use cases around payments.

The third leg of digital currencies are the central bank digital currencies. “These are relatively well-known. Probably the one most people know about is the digital Yuan that is currently in pilot phase in China and anticipated to be rolled out soon, backed fully by the central bank. It has the same legal tender status as cash.”

A vital part of digital currencies are the ecosystems that support them. “Ecosystems are important because it is not only physical infrastructure, but regulatory infrastructure as well, where we still have work to do,” said Glabischnig. Another element is providing capital for start-ups and other similar initiatives. “We found some very interesting ways to fund blockchain companies in the period 2016 to 2017. Switzerland went from five companies in that space in 2013 to 960 companies in five years.”

‘Digital assets’ is a more defined and holistic term than ‘digital currencies’, argued Glabischnig. “The Dubai Multi Commodities Centre (DMCC) has been a very good partner for us. We are now compiling statistics on the ecosystem in Dubai and in the UAE. My team has found 400 companies setting up in the UAE, with 100 of those in the DMCC. My personal target is to grow this to 1 000 by the end of the year. I believe the UAE could be one of the major ecosystems worldwide. This is also something interesting because we are decentralising a little bit of power.”

Glabischnig said: “We have seen a lot of power in Silicon Valley over the last 20 years to get big players like Google, Apple and Facebook on the go. We have seen a similar drive to consolidation in China over the same period. Now with this new decentralised world, we have the opportunity to relocate some of this power. It is important to be a bit more decentralised so to have an average chance for all the ecosystems globally to grow. This is one of my aims.”

Fraser Gordon, CEO of Quantum Works and Onboard, called for the mass adoption of cryptocurrencies. “We want to uncomplicate crypto. It has to be about ease of use. It must it be simple for people to adopt it. The entry barrier is just too high right now. We need to lower that entry barrier to get more mass adoption, without a shadow of a doubt.”

Glabishnig concurred that cryptocurrencies need to be part of ‘business as usual’. “When we cut out a lot of the middlemen there will be a huge potential to include those 200 million merchants we referenced, those corporates and small companies that are not in the digital arena today, in the digital financial system. When we can help finance them and can reach them, then we will have done something valuable with our industry. As long as we are only talking about it, we have not achieved that.”

As to what the future holds for digital assets, Glabischnig said: “We are always in an adoption wave. We will see the next crash for sure. So only put the money you can afford to lose into the market. I see this as a leading ecosystem with access to India and Africa, which are very interesting markets. However, digital assets are too hyped in terms of the global financial system. This is why there is a lot of inequality in the market. There is a lot of financial tension, as one of the most important digital identity traits essential for financial inclusion is for everyone to have a passport, for example.  We need to solve the identity problem before we can really solve the issue of financial inclusion.”

Gordon concurred: “I think we are going to see a much bigger increase in people adopting crypto as it is much more in the news. It is much more mainstream. We are going to see it being easier for people to adopt. That is why we want to get ahead of the game and make it as easy as possible for people to get into it. But one of the things I always say is it does not matter what you are spending your money on. Always do your own research. Understand what you are actually putting your money into and where you are putting it. Do not expect to become a millionaire overnight, because if you do, someone else has become very poor overnight. Always do your own research before you before you put your money into anything, and understand the systems that you have to use.”

Dr Jaffar advised new adopters of digital assets to “be responsible. Do not spend more than what you can afford to lose. Put a little bit in and be smart about it. Do not go in all at once. Do it in a staged manner so as to remain responsible. Secondly, be persistent. Things go up; things come down. This is the long term, and we do not know yet where or how or when things will turn out. Just take your time, make sure you are on top of it and always be curious because it is changing so fast.”

In our partnership with Fintech Surge, Oscar Wendel, Senior Manager, Dubai World Trade Centre has submitted this article.