Role of Cryptoassets and Cryptocurrencies in Trade Finance BBLC Practice Questions (Page 5)

Questions 21–25

1. 21application · medium

   A trade finance consortium wants to use smart contracts to automate the release of funds when goods are delivered. Which type of cryptoasset would be most suitable to use as the settlement medium within these smart contracts?

   • AA utility token that grants access to the consortium's platform.
   • BA security token representing equity in the consortium.
   • CA volatile cryptocurrency like Bitcoin.
   • DA stablecoin pegged to a fiat currency.
   Reveal Solution Discussion Select an answer first
2. 22foundation · easy

   Why are AML/KYC requirements particularly important when using cryptocurrencies in trade finance?

   • ABecause AML/KYC requirements only apply to traditional banks, not crypto transactions.
   • BBecause the pseudonymous nature of cryptocurrency transactions can be exploited for money laundering or terrorist financing.
   • CBecause cryptocurrencies are illegal in all jurisdictions.
   • DBecause AML/KYC requirements are optional for international trade.
   Reveal Solution Discussion Select an answer first
4. 23application · medium

   A trade finance consortium is building a blockchain platform to digitize letters of credit. The platform will use a cryptocurrency for settlement among member banks. Which design choice best addresses the regulatory requirement that all transactions be traceable to the parties involved?

   • AUse a permissioned blockchain where each participating bank is identified and transaction history is accessible to regulators.
   • BUse a public blockchain with pseudonymous addresses to protect the banks' commercial confidentiality.
   • CUse a smart contract that only records the transaction amount and not the parties' identities.
   • DUse a cryptocurrency that automatically anonymizes transactions after a set period.
   Reveal Solution Discussion Select an answer first
5. 24foundation · easy

   Which of the following is a significant challenge when using cryptocurrencies in trade finance?

   • APrice volatility can create uncertainty in the value of transactions and settlements.
   • BThey are not subject to any regulatory oversight.
   • CThey are always slower than traditional banking systems for cross-border payments.
   • DThey are universally accepted by all trading partners.
   Reveal Solution Discussion Select an answer first
6. 25application · medium

   A global trade company wants to reduce the cost of cross-border payments. They currently pay an average of 3% in fees and experience delays of up to 5 days. Which approach would most effectively reduce both costs and delays?

   • AUse a cryptocurrency with low transaction fees and near-instant settlement.
   • BNegotiate better rates with their current correspondent banks.
   • CUse a payment processor that batches transactions to reduce fees.
   • DSwitch to a different fiat currency for all transactions.
   Reveal Solution Discussion Select an answer first