In the race to bring down the cost sending money across borders to at most one percent of transaction value, the International Monetary Fund (IMF) and World Bank have put on the table the option of exploring the use of cryptocurrencies.

The digital assets, remain outlawed, or a legal grey area at best, in most jurisdictions around the globe, but the Bretton-Woods institutions feel they could solve the current high transaction costs nightmare slowing global trade and international development.

In a recent document, the IMF said it will “continue to encourage the implementation of the high-level recommendations for crypto assets, including their implications for cross-border payments.”

But while leveraging the power of cryptocurrencies are now on the table, there may be a long road to their adoption, especially in Africa, where cross-border payment costs are highest.

The IMF had earlier said that while early cryptos like Bitcoin and Ethereum represent significant risks to countries’ financial sovereignty, stablecoins, which are backed by other physical assets like the US dollar for instance, could offer an opportunity for conventional use, with proper regulation.

Experts believe stablecoins, which can essentially be created by any government or entity using the same technology that runs crypto assets such as Bitcoin, but more centralised, can be a gamechanger in processing cross-border payments.

The blockchain technology is mostly credited for its security.

“It’s never been hacked,” said Felix Macharia, CEO of Kotany Pay, a financial technology company which uses stablecoins to process cross-border payments.

“Blockchain is the only technology that enables a user to send any amount of value in seconds around the world, 24 hours a day and 365 days a year. It’s fast, efficient, and cheap,” Macharia told The EastAfrican.

Currently, most cross-border payments take hours, sometimes even days, to reach the recipients, but according to Macharia, the crypto technology could reduce this to minutes. The IMF’s end-2o27 target is to bring cross-border payment speed to under one hour.

Sharon Tum, the East Africa regional manager for payment service provider Yellow Card, which also uses stablecoins, believes the future of payments will inevitably converge towards the use of crypto, as traditional models are no longer tenable.

“Generally, in sending funds from one African country to a neighbouring nation, the transaction moves from the original bank to a correspondent bank in London or New York and thence to the bank in the neighbouring African state, (a couple hundred kilometres and a mere geographical border away),” Ms Tum said.

“This is inefficient and expensive. It was designed in the 1970s. Stablecoins and blockchain technology are simply a modern version of correspondent banking and SWIFT.” [This stands for the Society for Worldwide Interbank Financial Telecommunication].

On the flip side, cryptocurrencies, inclusive of stablecoins, tend to be a playground of criminals amidst minimal regulation in several jurisdictions, making them subject to scepticism and criticism on suitability for conventional use.

“Some users can use it to money launder or move illegal funds because most transactions are pseudo-anonymous,” said Mr Macharia, adding that there are tools in place to limit this.

Notably, stablecoins now account for about 62 percent of illicit crypto transactions globally, according to the latest Crypto Crime Report by blockchain research firm Chainalysis.

Beside crime, some critics also argue that cryptos lack liquidity and people may struggle to liquidate payments they receive using these digital assets, unless special arrangements are put in place.

Stablecoins differ from other cryptocurrencies in multiple ways.

One is because they are much less volatile as they are backed by physical assets, and they are also relatively more centralised, hence can be better controlled by issuers.

Essentially, this has made them the go-to crypto for most conventional use cases, for instance in aid delivery, as Kotany Pay does, and cross-border payments in some instances. However, it appears criminals are taking note as well.

“Sanctioned entities, as well as those operating in sanctioned jurisdictions or involved with terrorism financing, also have a greater incentive to use stablecoins, as they may face more challenges accessing the dollar through traditional means, but still want to benefit from the stability it provides,” Chainalysis said.

Transactions related to sanctioned entities and jurisdictions last year accounted for 61.5 percent of all illicit crypto dealings, amounting to about $14.9 billion, most of which was executed in stablecoins.