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Swedish Crypto Adoption

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by COINS NEWS 127 Views

Hello everyone,

As I have long thought about making a contribution to the subreddit I thought I would start with a post where I share my views of the pros and cons for widespread crypto adoption in the Swedish market, including different applications of cryptocurrencies.

Overview of the Swedish market

While Sweden has long been a small country in a European setting it has often been several steps ahead of its European counterparts and is often viewed as a leader when it comes to digitization and innovation but it has also been somewhat a leader when it comes to monetary policy. The Swedish Central Bank is the oldest to date as it was established in 1668 and it was also one of the first central banks to implement a negative repo rate and in 2017 the idea of a Central Bank Digital Currency (CBDC) arised. However, due to the recent issues of being able to keep the inflation at bay and earlier expansive monetary policies it is now facing criticism. The question is, will this possibly lead to further adoption of cryptocurrencies?

Sweden has, as earlier mentioned, been a forerunner in innovation and digitization but according to several surveys Sweden has fallen behind in cryptocurrency adoption compared to other similar countries. How could that be? One possible reason is that Swedes in general put a lot of trust to both state and government, suggesting that putting trust in individuals might be a big step for a lot of Swedes. But Swedish innovation and digitization opens a lot of doors for future adoption.

Sweden applies an online identification system called Bank-ID which an individual can get access through their bank. Bank-ID allows users to identify themselves when it comes to card/bank transactions, signing documents, login for governmental sites and much more. Sweden also has an app called Swish which allows users to safely transfer funds to other individuals and payments just by using a phone number (or a QR code) and the earlier mentioned Bank-ID. Maybe not a big deal, but what is interesting is that Swish has around 8 million private users, quite a lot when taking into account the amount of Swedish inhabitants (approximately 10.5 million). The system has not only gotten a lot of users but it has also been used frequently throughout the years (Swish started in 2012). In December alone Swish handled almost 82 million transactions and it now has almost 320 000 companies that accept Swish payments. This alone show how used Swedes are to dealing with transaction through their smart devices, suggesting that an implementation of crypto based payments could be possible but at the moment it would be dependent on the acceptance from the biggest banks of Sweden (which runs Swish).

But what about cryptocurrency adoption? In an survey taken by internet users in Sweden it was shown that only 6% of individuals above 18 years of age has bought or sold any type of cryptocurrency during 2022, however the number in 2021 were only 3%. But if we would focus on the younger generations and exclude older, less tech savvy, generations they find that approximatley 10-12% of people born between 1980-2004 (given that no individuals younger than 18 got to answer the survey) has bought or sold cryptocurrencies during 2022. Additionally a report by Samsung suggest that almost 25% of individuals between the age of 19-28 in Sweden has bought or sold cryptocurrencies, suggesting that the future might be bright for future crypto adoption.

What is the outlook from Swedish banks on cryptocurrencies then? Given that they are the ones that do control the most used digital payment system in Sweden. The Swedish Central Bank (not responsible for Swish) do not have a positive view of cryptocurrencies and did not even want to use the term currencies for them in their report in 2022, but was somewhat forced in order to not confuse readers (they had specific information about the lack of crypto payments made and their view of it as assets rather than currencies due to the volatility in crypto markets). The view from traditional banks has also been weak. However, Binance recently got accepted to register in Sweden and will enter the market and join earlier Swedish actors such as Safello and Btcx. Additionally this will lead to Swedes being protected by Swedish laws when it comes to deposits. The CEO of Avanza (one of the biggest Swedish banks for investments, however not one of the actors behind Swish) has swayed in the view of crypto and are opening for opportunities to incorporate cryptocurrencies on their website. What should be noted is that Avanza, together with another bank Nordnet, has been one of the players that has forced big banking in Sweden to adapt and change their approach when it comes to things such as technology and fees for investments.

Lets boil this down to some pros and cons.

Pros:

  • High technological adoption in Sweden.
  • Swish could theoretically be opened for crypto implementation.
  • Some banks show interest in cryptocurrencies (for example Avanza).
  • Binance recently accepted to register in Sweden, makes crypto more accessible for new crypto enthusiasts.

Cons:

  • Big banks run the digital payment system Swish which could be a way for cryptocurrencies to become a way of payment on a large scale (it will also be dependent on a centralized entity which is negative).
  • Swedes put a lot of trust into government and state, which could pose a issue as the Swedish Central Bank are negative towards cryptocurrencies.
  • Ease of payment might hinder adoption as swift and easy payments are already in place.
  • Relatively low adoption to date could delay further adoption, might change due to Binance entrance on the Swedish market combined with possible state guaranteed deposits on the platform.

I hope you found the read interesting!

submitted by /u/Uno-91
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