Cryptocurrencies’ potential as a payment method or a financing mechanism has yet to be realized, Fitch Ratings says, which poses both risks and opportunities for the financial sector.

In a new report, the rating agency said that it expects financial institutions and other corporations to see their exposure to crypto increase as uses for digital assets and the underlying blockchain technology expands.

“Most companies are moving cautiously, but customer demand and market regulation is expected to increase adoption and spur new business models,” the report said.

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At this point, the crypto market represents “a growth opportunity for fintechs, technology companies, data center providers and financial institutions,” Fitch said, “but it could have a disruptive effect on traditional financial institutions and legacy payment networks, depending on the pace and scope of adoption.”

To date however, the primary uses for crypto have been speculative investment and as a hedge against inflation, the report said. Using crypto for payments, loans and savings has been minimal “due to unfamiliarity and limited consumer protection.”

Moreover, concerns about the volatility of crypto prices, cyber crime, illicit use and regulatory uncertainty “are all risks to companies with meaningful exposure” to the crypto sector, Fitch said.

Against this backdrop, there remain significant obstacles to cryptos achieving widespread acceptance as an asset class or a form of payment.

Fitch said it believes that the use of crypto for retail commerce “has the most potential” but that adoption remains limited by a number of factors, such as price volatility, tax complexity and the cost of converting crypto to fiat currency.

Separately, Fitch reported that U.S. state and local governments have experimented with crypto.

For instance, in 2018, Ohio began allowing companies to pay taxes in crypto — but the program lasted less than a year amid legal pitfalls.

Since then, a few other states have crafted laws that are designed to be accommodative to crypto, it said. Certain non-profits and higher education entities have also begun to accept donations in crypto, but this remains a small share of total giving.

“Technological infrastructure and a clear policy framework are necessary to accept and process these donations,” Fitch said.

Security remains an overarching impediment too.

“The nascent global crypto regulatory environment and transaction anonymity contributes to the increased risk of cybercrime and ransomware attacks,” Fitch said.

Environmental worries and other ESG issues represent another potential headwind. Alongside concerns about the environmental cost of crypto mining, “social and governance issues may arise from crypto payments or donations from anonymous sources that could create risks for public entities,” Fitch said.