What Is ISO20022?
ISO20022 is an international standard that is to be used by all financial standards initiatives,[1]ISO20022 – About ISO20022 it would facilitate a standard method to improve the process of sending and receiving messages between financial institutions such as banks.
ISO standardization codes are already in use worldwide such as ISO4217. This standard is what assigns ISO Codes to currencies used in global transactions such as USD for the US Dollar and EUR for the Euro.
ISO20022 would also enable the interoperability of Central Bank Digitial Currencies (CBDCs) between various financial systems.
What Comprises The ISO20022 Standard?
Anything wishing to use the standard would have to comply with the SWIFT communication requirements. This includes sharing customers’ data from the database with the financial institutions. This is for security and regulation reasons that are needed for a centralized entity like a bank.
So as transparency is increased within the use of the standard, fraud is litigated as data is far more structured allowing for potential harmful patterns to be spotted with ease.
Support Of ISO20022
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has supported the standard since 2018 and has been migrating its members to the standard. Their members include HSBC, Bank of America, and Citibank.
Alongside SWIFT, The Federal Reserve Board stated that by 2023, Federal Reserve Banks will adopt the standard to be used within the Fedwire® Funds Service, which is a real-time gross settlement system owned and operated by the Federal Reserve Banks.[2]Federal Reserve – Federal Reserve Board announces the Reserve Banks will adopt a new message format for the Fedwire Funds Service
The World Economic Forum (WEF) makes mentions in a report titled Connecting Digital Economies that “Adopting the same standard [ISO20022] as other payment systems reduces the costs associated with integrating with the other systems.”[3]World Economic Forum – Connecting Digital Economies: Policy Recommendations For Cross-Border Payments, Page 18
What Are The ISO20022 Compliant Cryptocurrencies?
It is very important to understand that the standard is not built for blockchain and cryptocurrencies, although they are a part of it. It simply allows the projects that meet the standards the ability to operate within the field with financial institutions.
If a cryptocurrency were to be used by a financial institution then it is easy to do so, just use the ISO Standardization Code associated with the currency. Just because a cryptocurrency is compliant, it doesn’t mean that it will be used, this is a common misunderstanding that is very important to note.
Moreover, the common factor between all of the compliant cryptocurrencies is that they all aim to streamline international transfers and cross-border payments, which is the whole premise behind ISO20022.
| Cryptocurrency | ISO Code | Status |
|---|---|---|
| Ripple | $XRP | ISO20022 Standard Body[4]Ripple – ISO20022 Overview |
| Stellar Lumens | $XLM | ISO20022 Standard Body |
| Algorand | $ALGO | Compliant |
| IOTA | $MIOTA | Compliant |
| XDC Network | $XDC | Compliant |
| Quant | $QNT | Compliance Is Rumoured |
| Hedera Hashgraph | $HBAR | Compliance Is Rumoured |
| Cardano | $ADA | Compliance Is Rumoured |
| Chainlink | $LINK | Compliance Is Rumoured[5]Chainlink Today – At SWIFT’s Smarter Securities, Chainlink Co-Founder Sergey Nazarov Discussed How Institutions Can Prepare To Interface With Many Different Blockchains |
Notice that Ripple and Stellar have an X in front of their ISO Code. ‘X’ denotes that there is no country affiliated with the asset. In Ripple’s case, ”RP’ stands for Ripple, same with ‘LM’ for Stellar Lumens.
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