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digital daily: Gradually, then Suddenly

Gradually, then suddenly: Over a decade after the initial transaction using bitcoin to purchase a pizza, fewer than 16,000 businesses worldwide accept digital currencies (here). According to Deloitte, this is going to change in a hurry.  In a survey focused on US consumer facing business, a whopping 85% of retailers surveyed are giving either high or very high priority to enabling cryptocurrency payments within the next 24 months (here). The benefits are clear in their minds: clients want to use it, and digital makes managing revenue, receivables, and treasury easier. A clear majority of these retailers expect to partner with a digital currency payment processor, while as many as a fifth believe they can build the functions internally. The main divide at this point is not whether digital will fill the till but whether it will be via a stablecoin or another digital currency.  Two years is not a lot of time and certainly too little for a CBDC to be rolled out for the payment rails that will satisfy these plans. With the most at risk, Visa seems to have gotten the joke at least partly. In the first quarter of 2022, the payments firm report $2.5B in payments with its crypto-linked cards. But these transactions were processed on its existing network. Fresh faced Jack Mallers, CEO of Strike, prefers to start from scratch with a different set of rails. In April, his Lightning Network-based payments firm announced its latest partnership to enable digital payments using bitcoin, this time with Shopify’s global network of merchants (here). Payment infrastructure is a necessary first step, but policy changes are needed as well. The pending Responsible Financial Innovation Act, sponsored by Gillibrand and Lummis, would pave the way for adopting digital for day-to-day use by exempting small transactions from capital gains tax (here). Regulators will need to speed up if they want to guide this stampede.