Blockchain Technology in Finance: Applications, Risks, and Regulatory Challenges
DOI:
https://doi.org/10.61424/5z71bg40Keywords:
Blockchain technology, cybersecurity, academic literature, financial infrastructures, blockchain-financeAbstract
Blockchain technology has emerged as a transformative innovation within the financial sector, offering decentralized, transparent, and secure mechanisms for recording and verifying transactions. This study examines the applications, risks, and regulatory challenges associated with blockchain adoption in finance. It explores how blockchain-based systems enhance efficiency in payment processing, cross-border transactions, trade finance, asset tokenization, and smart contract execution by reducing intermediaries and operational costs while increasing transaction speed and transparency. Despite these advantages, the study identifies significant risks, including cybersecurity vulnerabilities, scalability limitations, energy consumption concerns, and potential exposure to illicit financial activities. Furthermore, the paper highlights persistent regulatory challenges arising from the decentralized and cross-jurisdictional nature of blockchain systems, which complicate oversight, compliance, and consumer protection frameworks. The study adopts a systematic review approach to synthesize existing academic literature, industry reports, and policy documents to provide a comprehensive understanding of the evolving blockchain-finance ecosystem. Findings suggest that while blockchain holds substantial potential to reshape financial infrastructures, its sustainable integration requires coordinated regulatory standards, technological advancements, and robust risk management frameworks. The study concludes that balanced governance strategies are essential to harness blockchain’s benefits while mitigating its systemic and operational risks in global financial systems.
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