By facilitating banks’ participation in cryptocurrency, Mastercard hopes to increase its popularity. The payment industry behemoth informed CNBC that it would be announcing a program on Monday to assist financial institutions in offering bitcoin trading.
According to the business, Mastercard will function as a “bridge” between banks and Paxos, a cryptocurrency trading platform that PayPal now uses to provide related services. Regulation compliance and security, two key reasons why banks steer clear of the asset class, will be handled by Mastercard and Paxos.
The public hasn’t always been convinced. The world’s leading digital assets have lost more than half of their value this year, and cryptocurrencies like bitcoin are notoriously volatile. In addition to numerous high-profile bankruptcies, the industry has experienced billion-dollar cyberattacks since January.
Though over 60% of respondents said they would prefer to test the waters through their current banks, Mastercard’s chief digital officer said research still indicates demand for the asset.
Jorn Lambert, the chief digital officer of Mastercard, told CNBC in an interview that while many consumers are interested in this and fascinated by cryptocurrencies, they would feel much more secure if similar services were provided by their financial institutions. Some individuals are still a little scared of it.
Although they have entire teams focused on cryptocurrencies, major investment banks like Goldman Sachs, Morgan Stanley, and JPMorgan have mainly refrained from making it available to consumers. Just this week, at an Institute for International Finance conference, Jamie Dimon, CEO of JPMorgan, referred to cryptocurrencies as “decentralized Ponzis.” Coinbase and other American exchanges may see increased competition if banks adopt this Mastercard collaboration model.
By implementing crypto compliance guidelines, confirming transactions, and offering anti-money laundering and identity monitoring services, the payments provider claimed that its job is to keep banks inside the bounds of the law. In the first quarter of 2019, Mastercard will pilot the product before “cranking the handle” to expand internationally. The banks that have so far signed up were not disclosed by Lambert.
Although the sector is now experiencing a bear market or “crypto winter,” Lambert suggested that future growth in activity might support Mastercard’s main business by generating more transactions.
We don’t see that, he added, adding that it would be naive to assume that a brief crypto winter signals the end of the world. “As regulation enters the market, there will be a higher level of security available to the crypto platforms, and we’ll see a lot of the existing concerns getting rectified in the quarters in the years to come,” says the author.
Visa Vs Mastercard
Both Visa and Mastercard have been aggressively forming cryptocurrency partnerships. To allow banks and merchants in its network to offer cryptocurrency-related services, Mastercard has already partnered with Coinbase on NFTs and Bakkt.
The last week saw Visa’s collaboration with FTX to offer cryptocurrency debit cards in 40 different nations. Visa already has more than 70 crypto collaborations. Stablecoins are digital coins that are linked to the value of the dollar or another fiat currency. American Express has stated that it is investigating the use of stablecoins with its cards and network.
Ironically, the purpose of cryptocurrencies was to replace middlemen like Visa and Mastercard and banks. Transactions can take place without middlemen thanks to the blockchain technology that underpins them. Lambert claimed that despite this, there has been no opposition from the sector regarding their engagement. In order to get there, he said, crypto needs to work with the established players and is still on the “cusp of really going mainstream.”
Without embracing the traditional financial sector, Lambert asserted, “it’s difficult to imagine that the crypto economy will ever go mainstream.”
About Mastercard
Mastercard Inc. is the second-largest firm in the world for processing payments. Financial services come in many different forms. Its corporate headquarters are in Purchase, New York. Its primary activity is the processing of payments between the financial institutions of merchants and the financial institutions or credit unions that issue the debit, credit, or prepaid cards that are used by clients to conduct transactions all over the world. The Mastercard brand has been traded publicly since 2006.
Mastercard was established in opposition to Bank of America’s BankAmericard, which eventually changed its name to Visa and is today the company’s major competition. Before its first public offering, more than 25,000 financial institutions that issue its branded cards collectively owned Mastercard Worldwide.
Continue to read more latest news
187 total views, 1 views today