Blockchains, Distributed Ledgers and Funds Transfer: An Overview

This report examines the potential of Distributed Ledger Technology (DLT), including public blockchains like Bitcoin and private distributed ledgers, to improve funds transfers and financial inclusion in emerging markets. It analyzes how these technologies can reduce remittance costs, streamline inter-institutional clearing and settlement, and enhance regulatory oversight for Anti-Money Laundering (AML) and Know Your Customer (KYC) processes.

• Distributed Ledger Technology (DLT) offers opportunities to improve funds transfers, payment settlement, and regulatory oversight due to its transparent, replicated, and decentralized nature. It has the potential to lower remittance costs, accelerate settlement speed, reduce settlement risk, and lower entry barriers for financial institutions.
• Public DLT, specifically Bitcoin, can function as a public accounting system and a platform for high-speed, low-cost value transfers. However, its adoption as a peer-to-peer remittance tool is hindered by high 'costs at the edge'—specifically the limited access to affordable cryptocurrency-fiat exchanges—as well as issues with scalability, volatility, and legal standing.
• Private DLT can be used for clearing and settling obligations between financial institutions domestically or internationally. Compared to centralized systems, private DLT is described as more scalable, less costly to establish, and more secure against systemic fraud. It is particularly effective at removing complex reconciliation processes and substituting paper-based workflows.
• DLT can enhance regulatory frameworks for Anti-Money Laundering (AML) and Know Your Customer (KYC) processes. The transparency and traceability of blockchain transactions allow for a shift from traditional gate-keeping to continuous review of ledger entries to identify misbehavior, potentially making it easier to trace funds than with cash or some bank transfers.
• DLT has the potential to serve as a reliable, near real-time store of identity information and a generator of dynamic identity attributes, such as creditworthiness, which could address barriers to credit decision-making. However, reliability depends not only on DLT's intrinsic characteristics but also on alignment with national security standards and laws.
• In the context of international aid, the report suggests using 'sterling-linked coins' on a blockchain to ensure funds are used for intended purposes. By adding metadata to the contents layer, these coins could be restricted from being spent on inappropriate items.

APA

FSD Africa (2017). Blockchains, Distributed Ledgers and Funds Transfer: An Overview. https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf

Chicago

FSD Africa. Blockchains, Distributed Ledgers and Funds Transfer: An Overview. 2017. https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Blockchains, Distributed Ledgers and Funds Transfer: An Overview |date=August 2017 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2017blockchains, author = {{FSD Africa}}, title = {{Blockchains, Distributed Ledgers and Funds Transfer: An Overview}}, institution = {FSD Africa}, year = {2017}, month = aug, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Blockchains-02.08.2017.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }