Will crypto replace traditional finance in our daily lives?

There needs to be more regulatory certainty, further adoption of public use cases and a reduction of crimes to increase confidence

Cryptocurrency enthusiasts at the Token2049 event in Dubai. Antonie Robertson / The National

Cryptocurrencies are rapidly gaining more popularity, but it will be a while before they can replace traditional finance in our daily life tasks, according to experts.

For cryptocurrencies to become the primary financial mode, there needs to be more regulatory certainty, further adoption of public use cases and a reduction of crimes in the sector, according to experts at the cryptocurrency conference Token2049 in Dubai this week.

Navin Gupta, chief executive of Crystal Intelligence, said traditional financial institutions wouldn’t want to miss out on cryptos, because customers want the best of both worlds. Antonie Robertson / The National

Initially, traditional finance and the new system of digital currencies will compete with each other, but the customer will eventually win because of better pricing, improved speed, quality and efficiency, said Navin Gupta, chief executive of blockchain analytics platform Crystal Intelligence.

“This week, First Abu Dhabi Bank [along with IHC and ADQ] announced plans to launch its own stablecoin. Traditional institutions wouldn’t want to miss out because their customers would want the best of both worlds. They can access traditional finance, crypto, blockchain-enabled finance, and then choose whichever one but from the same brand. But that will take some years because we have many institutions that need to wake up to the new reality,” Mr Gupta said.

Crypto will “definitely emerge” in the next three years as a choice that every customer will have, he added.

The UAE is taking steps to boost the adoption of digital assets and has launched several initiatives to support the sector.

Abu Dhabi's ADGM has attracted global cryptocurrency players such as eToro and M2, allowing these companies to operate as a broker for securities, derivatives and crypto assets, and platforms for institutional and retail investors to buy, sell and hold custody of virtual assets.

Dubai also adopted a law in 2022 to regulate virtual assets to support investors and streamline the offerings from exchanges. The emirate also set up the Virtual Assets Regulatory Authority under the Dubai Virtual Asset Regulation Law, to create an advanced legal framework.

The UAE Central Bank also issued a regulation on stablecoins last June that will only allow businesses and sellers in the Emirates to accept cryptocurrencies for goods and services if they are dirham-backed stablecoins.

Token2049 Crypto Summit in Dubai – in pictures

Changpeng Zhao, the former chief executive of Binance, during a fireside chat

A dance and light performance during the opening day of the Token2049 Dubai summit on Wednesday. All photos: Antonie Robertson / The National

Guests at the main stage of Token2049 Dubai

Star Xu, founder and chief executive of OKX, delivering a keynote at the event

Bitcoin has been a hot topic at the Token2049 Dubai summit

Token2049 is a conference that unites different blockchain and crypto companies under one banner for collaborations and exchanging ideas

An electronic board displaying current prices of cryptocurrencies

Crypto companies and enthusiasts flocked to Dubai to participate at Token2049

Mr Gupta praised the UAE for its regulatory clarity and also cited improving policy certainty in the US. Most jurisdictions realise that “this genie cannot be put into the bottle” and are coming up with regulation to keep customers safe, he said.

However, he stressed the need for more adoption in terms of use cases, for example, remittances, payments or digital collectibles. Many use cases also need to become far more prominent, and the number of scams need to go down, he cautioned.

Alice Shikova, marketing team lead at digital identity platform Space ID, also warned of challenges of interoperability and the lack of UX/UI experience for crypto users.

It's still “complex to switch between chains and to transact freely”, she told The National. “You always need to watch out for potential hackers. Everyone in the crypto space should have their own digital identity and on-chain name, that will make every transaction and person verifiable,” she suggested.

When it comes to crypto use cases, payments solutions could offer big benefits, said Harrison Seletsky, director of business development at Space ID.

At present, if you want to do an international remittance transaction, there's relatively high fees and it may take a few days. With crypto, it can be instantaneous, permission-free and a lot cheaper, he said.

Alice Shikova and Harrison Seletsky from digital identity platform Space ID at Token2049 in Dubai. Antonie Robertson / The National

Stablecoins offer an example of a “massive” use case already, especially for up-and-coming economies. For people who may not have easy access to US dollars, cryptos give them instant access to safe and secure alternatives on the blockchain, Mr Seletsky added.

Vincent Chok, chief executive of First Digital, agreed that stablecoins are the “next frontier of borderless finance” and are emerging as key players in the new financial infrastructure. Taking remittances as an example, he said in traditional systems, money movement is slow, expensive and limited by banking hours. Stablecoins change that by enabling users to send money globally, instantly and at a lower cost with 24/7 availability.

“It's definitely going to take some time because the banks move very slow. But the underlying infrastructure and value proposition are clear. So, over time, it will continue to move in that direction,” Mr Seletsky said.

Paul Talbert, managing director and co-founder of Asset Token Ventures, a company that tokenises assets in fixed income and private credit, said the entry of more retail investors will help cryptos get more mainstream.

As more regulation and public use cases come out, people will get more comfortable with it. They may replace traditional finance maybe in five years or 10 years, he reckoned.

“We're seeing a lot of growth. If you just look from 2023 to 2024, there was a massive increase in the amount of assets that were tokenised. We'll continue to see that,” Mr Talbert said.

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“But it needs retail investors coming to the game, and that's coming on board slowly because regulation has made it slower than it could be. Other places like the US have to take a regulatory approach like the UAE and make it easier for the smaller retail investors.”

Mr Chok from First Digital believes crypto won’t replace traditional finance but will support it, boosting “financial fluidity”.

Hailing the arrival of spot Bitcoin exchange-traded funds, led by companies like BlackRock and Fidelity as a major milestone for crypto, Ryan Chow, founder of Solv Protocol, said they’ve played a key role in bridging the gap between traditional finance and crypto, giving institutional investors streamlined access to Bitcoin.

“Crypto isn’t just for speculators any more, it’s becoming part of the broader financial conversation,” Mr Chow said.

“Crypto still has a long way to go before it can truly rival traditional finance, but there’s no question that the groundwork is being laid.”