ABSTRACT
Cryptocurrencies have the potential to remove or reduce barriers to international trade by offering transactions with low or no processing fees, faster processing times and trust without an intermediary. This chapter examines the advantages and disadvantages of cryptocurrencies relative to fiat currencies in international transactions. It describes ongoing work to measure cryptocurrency transactions and discusses the source data necessary and available for this task. The faster transactions, lower fees and higher transparency offered by cryptocurrencies can facilitate additional international transactions, such as some foreign worker remittances and cross-border payment settlements that are too expensive or impossible using traditional fiat currency. Despite the advantages it offers over fiat currencies, cryptocurrency is limited in its ability to function as a currency and by its association with illegal activity. Deciding how cryptocurrencies and their associated transactions should be classified in balance of payments accounting is key to measuring their contribution to international economic activity.
