Ann: June Quarter Results Presentation, page-101

Hi dubspec, this is definitely not an area I have much knowledge in…

I did find the following informative, however, I am not sure of the exact reasons why Novatti operate in this space.. perhaps better to ask the research organisations covering the the company or Novatti themselves.. below information is more generic in nature.

Both cryptocurrencies and ISO 20022 serve as mechanisms to transfer value, but they operate on different paradigms. Here’s a breakdown of their similarities and differences:

A. Similarities:

1. Digital Nature: Both methods involve digital transactions. Whether it’s a crypto transfer or an ISO 20022-compliant transfer, there is no physical movement of money; everything happens electronically.

2. Global Reach: Both systems allow for international transfers. With cryptocurrencies, you can send funds globally with the same ease as local transfers. Similarly, ISO 20022 supports cross-border payments by establishing a common messaging standard.

3. Transparency: Both methods emphasize transparency. On the blockchain, transactions are transparent to anyone who wants to view them (though the parties involved can remain pseudonymous). ISO 20022, by structuring data in a more organized manner, allows for clearer, more transparent transactions among banks and financial institutions.

B. Differences:

1. Decentralization vs. Centralization: Cryptocurrencies typically operate on decentralized networks (like blockchain), which means no single entity controls the currency or its ledger. ISO 20022, on the other hand, is a centralized messaging standard adopted by financial institutions.

2. Control and Regulation: Cryptocurrencies operate outside the traditional banking system and are less regulated in many jurisdictions. ISO 20022, being a standard for traditional banking and financial messages, operates within the regulated financial environment.

3. Speed and Cost: Cryptocurrency transfers, especially on newer or less congested blockchains, can be faster and less expensive than traditional banking transfers. However, the speed and cost for both crypto and ISO 20022 transfers can vary depending on the specific circumstances.

4. Finality: Many cryptocurrencies offer transaction finality (once a transaction is added to the blockchain, it cannot be reversed). In contrast, some traditional banking systems may allow for transaction reversals or chargebacks, though ISO 20022 in itself doesn’t dictate this—it’s more about the messaging format.


5. Interoperability: ISO 20022 is all about interoperability—it aims to provide a unified standard for different financial institutions globally. Cryptocurrencies, unless they’re bridged, often operate on their own separate blockchains.

6. Security Mechanism: Cryptocurrencies rely on cryptographic principles for security. While ISO 20022 ensures secure and clear messaging, the underlying security of transactions is still dependent on the infrastructure of participating banks and financial institutions.

7. Adoption and Recognition: As of my last training data in 2021, traditional banking systems and many governments recognize and are moving towards adopting ISO 20022, whereas cryptocurrency adoption varies by jurisdiction and institution, with some embracing it and others remaining cautious or even resistant.
In conclusion, while there’s some overlap in the purposes served by cryptocurrencies and ISO 20022, they are fundamentally different in design, operation, and regulation.


C. Costs

The costs associated with cryptocurrency transactions and ISO 20022-compliant transactions can vary significantly based on various factors. Here’s a breakdown:

Cryptocurrency Transactions:

1. Network Fees: The transaction fee in a cryptocurrency network is typically used to compensate miners or validators. This fee can vary based on network congestion. For example, during times of high demand, Bitcoin and Ethereum fees have been known to spike significantly.

2. Exchange Fees: If you’re converting from fiat currency to cryptocurrency or vice versa through an exchange, there will be fees involved. These vary by exchange and can be a percentage of the transaction or a flat fee.

3. Wallet Fees: Some digital wallets might charge fees for transactions or for using certain features.

4. Speed: While faster transactions might sometimes be an advantage with crypto, if you want your transaction to be prioritized, you might have to pay a higher fee.

5. Volatility: Cryptocurrencies can be highly volatile. While not a direct “fee,” the change in value of the cryptocurrency during the transfer process can effectively result in higher costs if the value drops significantly.

ISO 20022-compliant Transactions:

1. Bank Transfer Fees: Banks often charge fees for sending international transfers. These fees can be flat or based on the amount being transferred.

2. Currency Conversion: If you’re sending money internationally and converting between currencies, there will be exchange rate margins and potentially additional fees involved.

3. Intermediary and Receiver Bank Fees: For international transfers, there are often intermediary banks involved, and each can take a cut. The receiving bank might also charge a fee.

4. Speed: Traditional bank transfers, especially international ones, can take several days. Some banks might offer faster services for higher fees.

5. Compliance Costs: Due to regulatory requirements, banks may need to perform additional checks for larger transactions, which can indirectly increase costs.

6. Fixed Costs: Implementing and maintaining systems compliant with ISO 20022 might involve significant costs for banks. These costs, while not directly charged to the customer for each transaction, might be passed on indirectly.

Comparative Summary:

• Cryptocurrency transactions, especially on less congested networks, can be cheaper and faster than traditional bank transfers, especially for international transactions.

• ISO 20022 transactions, being part of the traditional banking system, might come with various fees, but they offer the advantage of a regulated, widely recognized system.

• Costs can also be situational. For example, a domestic bank transfer in some countries might be very cheap or even free, while sending a cryptocurrency transaction during times of network congestion can be expensive.It’s essential to research the specific costs associated with the cryptocurrency or banking service you’re using, as these can vary widely based on the platform, the country, the amount, and the current demand.

Hopefully something here for you.

‘Cheers Anton
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