The rise of cryptocurrency and blockchain technology has opened new avenues for financial innovation, with digital token payments emerging as a transformative force in this evolution. However, for the crypto space to truly flourish—especially in payments—the regulatory environment must be conducive to growth while safeguarding consumer interests.

Cryptocurrencies thrive on innovation, but without clear and consistent regulations, this innovation risks being stifled or, at the very worst, descending into chaos. An ideal regulatory environment strikes a balance between protecting consumers and fostering innovation. Regulations should be clear, consistent, and applicable across global jurisdictions to prevent regulatory arbitrage and ensure that businesses can operate confidently within a legal framework.

The importance of balanced regulation has been underscored by recent developments in regions such as the European Union, where the Markets in Crypto-Assets Regulation has set a precedent for global regulatory standards. MiCA’s comprehensive approach is already influencing regulations in the UK and Singapore, where authorities are developing frameworks that emphasize both consumer protection and industry collaboration​.

The digital token payment industry faces significant challenges, including regulatory uncertainty, inadequate infrastructure, and even distrust from some areas of the public. These barriers prevent the widespread adoption of crypto payments and slow the development of the broader web3 ecosystem. Both consumers and businesses are hesitant to fully embrace crypto payments without assurance that their transactions are secure and compliant with local laws.

Barries for financial inclusion

Recent statistics underscore the urgency of addressing these barriers. As of 2024, global cryptocurrency ownership has surged to 562 million, a 34% increase from the previous year​. However, this rapid growth has also highlighted the need for robust fiat-to-crypto on-ramps and other infrastructural developments.

Services such as fiat-to-crypto on-ramps act as a bridge between traditional finance and the digital token space, making it easier for users to obtain access to digital assets. Platforms such as Mercuryo play a crucial role in this ecosystem. The presence of multiple crypto-to-fiat, on-ramp providers is essential to mitigate risks such as technical issues or coverage gaps that could disrupt transactions and lead to deposits being rejected. By leveraging diverse solutions, the ecosystem remains resilient, offering users a seamless experience across different platforms.

Ultimately, collaboration between the cryptocurrency industry and regulators is vital for developing frameworks that encourage innovation while ensuring security and trust. Recent events, such as the Consensus 2024 conference, have highlighted the growing alignment between institutional investors and regulators in the US, where there is increasing optimism about the future regulatory landscape​.

Crypto payments have the potential to significantly enhance financial inclusion, particularly in Latin America. According to World Bank data, approximately 122 million people in Latin America (approximately 26% of the population) were still unbanked in 2021. Where access to traditional banking services is limited, digital token payments offer a way to participate in the global economy. This capacity is enhanced by the wide penetration of smartphones and mobile applications in regions such as Latin America, where the smartphone adoption rate is expected to reach 92 percent by 2030, up from approximately 80 percent in 2023, according to Statista. Stablecoins transferred on mobile apps represent a disruptive technology to traditional money transfer services that are laden with expensive fees and charges.

For regulators and stakeholders in the Global North, financial inclusion should be a priority. A more inclusive financial world aligns not only with ethical considerations but also with broader goals of economic development and global stability. By fostering crypto adoption in the Global South, stakeholders in the Global North can drive innovation and economic growth, benefiting the global economy as a whole. This interconnectedness makes it crucial for stakeholders to support regulatory frameworks that promote financial inclusion through crypto payments.

Crypto adoption as a solution

Even in Europe, cryptocurrency adoption is increasingly recognized as a powerful tool for enhancing financial inclusion, particularly in regions and demographics that have been underserved by traditional banking systems. With over 49.2 million cryptocurrency owners in Europe as of 2024, representing a 60.3% increase from the previous year, there is growing evidence that digital currencies are playing a significant role in broadening access to financial services even in the developed world​.

One of the key factors driving this trend is the region’s robust regulatory environment. The EU’s MiCA, which came into effect in 2024, is setting global standards for the crypto industry by providing clear guidelines that enhance market integrity and boost investor confidence. MiCA is expected to serve as a model for other jurisdictions, fostering a secure and inclusive environment for the growth of crypto assets across Europe​.

In addition, the World Economic Forum highlights that the growing digital finance ecosystem in Europe, supported by blockchain technology, is opening up new opportunities for financial inclusion. Digital assets and blockchain technology are enabling more efficient, low-cost financial services, which can be particularly beneficial for Europe’s unbanked or underbanked populations. This is especially relevant in Eastern Europe, where access to traditional banking services has historically been limited​.

Financial inclusion through the adoption

For regulators and stakeholders in Europe, the focus should be on continuing to support regulatory frameworks that promote financial inclusion through the adoption of digital assets. This approach not only aligns with the EU’s broader economic development goals but also positions Europe as a leader in the global push towards a more inclusive financial system.

For the average person, the evolution of digital token payments and the regulatory environment around them might seem abstract. However, the implications could soon impact daily life in meaningful ways.

Imagine being able to send money across the world instantly, with low fees and no concerns about exchange rates or bank delays. As crypto payments become more mainstream and regulatory frameworks mature, these transactions will become safer and more accessible. This shift means more people can enjoy the benefits of digital currencies without the fear of losing their money to scams or technical glitches.

The ongoing efforts to clarify and enhance the regulatory environment, as seen in the EU’s MiCA framework and similar initiatives, are paving the way for broader adoption and integration of crypto into daily life. As these frameworks are implemented, the average user will likely experience a more stable and secure crypto environment​.

In regions with limited access to banking, crypto payments could be transformative, providing a gateway to global financial markets and opportunities that were previously out of reach. As the cryptocurrency industry continues to evolve, the importance of a regulatory environment that encourages innovation while protecting consumers cannot be overstated. Overcoming existing barriers to growth requires collaboration between the industry and regulators, with a focus on building trust and facilitating adoption. Additionally, the potential for digital token payments to drive financial inclusion globally should be a key consideration for stakeholders.

By working together, the cryptocurrency industry and regulators can shape a future where digital token payments are not just a niche innovation but a mainstream financial tool that benefits everyone—especially those looking for a better, more inclusive way to manage their finances.

This article was co-authored by Max Zheng and Pascal Kurzawa.