This Week in Web3: Unlocking Blockchain’s Potential Within Payment Ecosystems

Blockchain is growing into a global innovation that transcends its initial association with crypto.

The auction house Christie’s, for example, recently announced that an upcoming collection of fine art photography will include blockchain-based certificates of ownership for digital provenance purposes.

And from banking to payments and beyond, blockchain technology is being adopted in mainstream industries, with a global appeal that stems from its ability to transcend borders and facilitate decentralized, transparent and efficient processes while offering benefits like programmable capabilities.

But this growth hasn’t been without challenges. One of the obstacles to blockchain’s broader acceptance is the fragmented regulations across regions. As regulations evolve and blockchain matures, companies will need to stay ahead of the curve to harness the potential of this technology.

PYMNTS each week tracks the trends and themes of Web3’s journey to greater adoption and utility across payments and commerce.

Read more: Stablecoins, Tokenization and Caroline Ellison Headline This Week in Web3

Navigating Regulatory Hurdles

News broke recently that Dubai’s cryptocurrency regulator wants companies to warn customers of the risks of digital currencies. The regulator, the Virtual Assets Regulatory Authority, updated its guidelines and will require companies that want to market crypto in the United Arab Emirates to include a new and “prominent” disclaimer starting Tuesday (Oct.1).

Sometimes regulatory clarity in one jurisdiction can make up for challenges in others. For example, Robinhood is offering cryptocurrency transfers to European customers amid regulatory pressure in the United States. The service, “one of the most requested features in the region,” allows customers to deposit and withdraw more than 20 cryptocurrencies, including bitcoin, ethereum and USD Coin, according to a Tuesday (Oct. 1) announcement.

Tuesday’s announcement follows a report from last week about a possible collaboration between Robinhood and U.K. FinTech Revolut to issue stablecoins. Both companies declined to confirm the report.

Stablecoins, which are digital assets pegged to the value of traditional currencies, have become a focal point in the cryptocurrency and financial sectors due to their relative stability compared to volatile assets like bitcoin.

Read more: Can Stablecoins Spark Crypto Adoption Across Retail and B2B Markets?

Blockchain’s Expanding Role

Blockchain technology was once synonymous with cryptocurrency but is now expanding into mainstream industries, according to the PYMNTS Intelligence, Solana and Solana Foundation collaboration, “Blockchain’s Benefits for Regulated Industries.”

The technology’s decentralized ledger offers promising applications in banking, payments, and programmable finance. One recent example comes from First Abu Dhabi Bank (FAB) which Sept. 24  successfully completed a pilot using programmable payments with JPM Coin through Onyx by J.P. Morgan.

“This successful pilot opens up the possibility of a dynamic and automated funding and settlement solution to FAB and J.P. Morgan’s mutual clients,” the companies announced. “This solution will enable clients to benefit from Onyx’s real-time and/or event-based programmable capabilities.”

And elsewhere, Worldpay is reportedly in talks with blockchains about becoming a validator and verifying blockchain transactions. The payments provider aims to do so to better understand how digital ledgers operate and to be involved with blockchain infrastructure.

Read more: Are Blockchain-Based Smart Contracts a Smart Option for Global Financing?

“The idea is to be part of the ecosystem right at the base,” said Sanchit Mall, Worldpay’s Web3 and crypto lead in the Asia-Pacific region. Worldpay has processed $1.3 billion worth of payments using stablecoin so far this year, up from less than $1 billion in 2023, according to the report.

Worldpay’s exploration of blockchain validation underscores a critical point: The payments industry is seeking to harness blockchain’s capabilities. While cryptocurrency adoption remains uneven across the globe, industry leaders are preparing for a potential shift toward blockchain-based solutions that could eventually underpin financial ecosystems.

As another data point, PayPal Holdings now enables U.S. merchants — except those in New York State — to buy, hold and sell cryptocurrency directly from their PayPal business accounts. The company also now enables PayPal business account holders to send and receive supported cryptocurrency tokens to and from external blockchain accounts, PayPal Holdings said in an announcement Sept. 25.

Meanwhile, consumer behavior is also shifting in favor of digital currencies. Tech-driven consumers — the 15% of consumers who are usually the first to buy the latest connected device — are often habitual cryptocurrency users, according to the PYMNTS Intelligence report “Shopping With Cryptocurrency: Tech-Driven Consumers Drive Market Acceptance.” The study showed that 24% of these consumers use cryptocurrency at least 10 to 20 times per month.

This tech-driven cohort is likely to be a crucial demographic for businesses seeking to integrate blockchain and cryptocurrency solutions. As these early adopters embrace the convenience and efficiency of blockchain, they pave the way for broader market acceptance, forcing companies to rethink their strategies in the digital economy.