Mastercard will help banks offer cryptocurrency trading

Mastercard seeks to bring crypto to the masses by making it easier for banks to get involved.

The payments giant plans to announce a program on Monday that will help financial institutions offer cryptocurrency trading, the company told CNBC. MasterCard will serve as a “bridge” between Paxos, a crypto trading platform already used by PayPal to offer a similar service, and banks, according to the company. Mastercard will take care of regulatory compliance and security – two main reasons cited by banks for avoiding the asset class.

Some consumers are also skeptical. Cryptocurrencies like bitcoins are notorious for their volatility, and the world’s top digital assets have lost more than half their value this year. The industry has suffered billions in hacks since January, coupled with multiple high-profile bankruptcies.

Mastercard’s chief digital officer said polls still showed demand for the asset, but around 60% of respondents said they would rather test the waters through their existing banks.

“There are a lot of consumers who are really interested in this and intrigued by crypto, but they would feel a lot more confident if these services were offered by their financial institutions,” Mastercard chief digital officer Jorn Lambert told CNBC. interview. “It’s still a bit scary for some people.”

Big investment banks like Goldman Sachs, Morgan Stanley and JP Morgan have dedicated crypto teams but have largely avoided offering it to consumers. Just last week, JPMorgan CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis” at an Institute for International Finance event. If banks adopt this Mastercard partnership model, it may mean more competition for Coinbase and other exchanges operating in the United States

The payments company said its role is to keep banks on the right side of regulation by following crypto compliance rules, verifying transactions and providing anti-money laundering and security monitoring services. ‘identify. Mastercard will pilot the product in the first quarter of next year and then “crank the crank” to expand into more geographies. Lambert declined to say which banks have signed up so far.

As the industry experiences a bear market or “crypto winter,” Lambert said increased activity could lead to more transactions and fuel Mastercard’s core business.

“It would be short-sighted to think that a bit of a crypto winter heralds the end of it – we don’t see it,” he said. “As regulations come into effect, the degree of security available to crypto platforms will be higher and we will see many current issues being resolved in the quarters of years to come.”

Mastercard and Visa have both been involved in crypto partnerships. Mastercard has previously partnered with Coinbase on NFTs and Bakkt to enable banks and merchants in its network to offer crypto-related services. Last week, Visa has partnered with FTX to offer crypto debit cards in 40 countries and has over 70 crypto partnerships. American Express said it was exploring using its cards and network with stablecoins, which are pegged to the price of a dollar or other fiat currency.

Cryptocurrencies, ironically, were meant to disrupt banks and intermediaries like Mastercard and Visa. Their underlying technology, blockchain, allows transactions to move without intermediaries. Still, Lambert said they haven’t seen the industry push back on their involvement. Crypto is on the verge of “going mainstream” and still needs to team up with incumbents to make it happen, he said.

“It’s hard to believe the crypto industry will truly mainstream without embracing the financial industry as we know it,” Lambert said.

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