Opportunities and Challenges of Distributed Ledger Technology in Cross-Border Financial Transactions

Abstract

This research investigates the adoption of Dis- tributed Ledger Technology (DLT) in cross-border financial transactions, driven by the increasing need for more efficient, secure, and transparent methods in a globalized financial market. Traditional cross-border transactions often face challenges such as delays, high costs, and security risks, making DLT a promising solution with its ability to provide secure, immutable, and trans- parent transaction records. The study focuses on understanding how trust, security, perceived usefulness, and perceived ease of use influence the adoption of DLT. Conducted with 150 respondents, primarily young adults from Jakarta and Tangerang, the research employed Structural Equation Modeling–Partial Least Squares (SEM–PLS) to test six hypotheses. The results of this study indicate that both Trust and Security have a positive and significant impact on the adoption of Distributed Ledger Technology (DLT) in cross-border financial transactions. Utilizing the Partial Least Squares Structural Equation Modeling (PLS- SEM) method, addressing the growing need for more efficient, secure, and transparent methods in global finance. These findings hold significant practical implications for financial institutions, suggesting that enhancing trust and security in Distributed Ledger Technology (DLT) systems can lead to broader adoption and ultimately improve the efficiency and transparency of cross- border financial transactions. These findings underscore the critical importance of trust and security in promoting DLT adoption in cross-border transactions, suggesting that efforts to enhance these factors will be crucial for broader acceptance of DLT. Future research should explore additional variables, such as regulatory frameworks and cultural factors, that may also affect DLT adoption in different regions.