Mastercard is teaming up with banks to turn crypto mainstream
The crypto market is volatile and still unknown to most people, but Mastercard wants to change that. The company plans to introduce crypto trading to the masses by teaming up with big investment banks.
by Aline Barbosa
The payments company is launching a new program that will offer crypto trading.
Credit card company Mastercard is looking to make crypto more accessible to the masses. The idea is to make it easier for financial institutions to participate. The company plans to make an announcement sometime this week that will start assisting banks to offer cryptocurrency trading.
According to the company, Mastercard plans to act as a bridge between crypto trading platform Paxos and banks. Both Mastercard and Paxos will be responsible for security and regulatory compliance, which are the two main reasons most banks avoid cryptocurrencies.
But banks are not the only ones worrying – consumers are also voicing their concerns. Crypto has a high volatility, and bitcoin – the world’s most valuable digital coin – lost a significant value in 2022. Since January, there’s also been multiple bankruptcies and hacks that cost the industry billions of dollars.
In a brief statement, John Lambert, chief digital officer for Mastercard, says that there’s still a high demand for crypto. However, more than half of respondents who participated on a poll conducted by the company said they’d prefer to use it through the banks they’re customers to.
Lambert states that many consumers are interested in and intrigued by the crypto market. But they would feel more confident if they could hire those services through their banks. Since it’s not a broader market, many still feel scared by it.
Banks like JPMorgan, Goldman Sachs and Morgan Stanley already have dedicated teams that handle cryptocurrencies. However, all institutions have avoided offering these assets to consumers.
If big investment banks do decide to embrace the new Mastercard partnership, exchanges across the U.S., like Coinbase, can expect a lot more competition on the horizon.
Mastercard wants crypto to become mainstream
Mastercard said its main role is to make sure banks are on the right side of regulation. To do so, they intend to follow the cryptocurrency compliance rules, as well as provide identity monitoring and anti-money-laundering services.
The payments company will test their new product during Q1 of 2023, and then gradually expand to other countries. It’s unclear which banks have signed up for the test run so far. While it’s clear that the industry is going through a crypto winter, Lambert believes that further activity could fuel the company’s core business due to more transactions.
Both Mastercard and Visa have a couple of crypto partnerships currently. Mastercard and Coinbase have a team-up on NFTs, and just last week Visa partnered with FTX. The new Visa partnership will offer debit cards for crypto spending in over 40 countries. Amex is the only one who’s not yet in the game, but it’s said to be exploring stablecoins.
Ironically, crypto was created to disrupt the traditional way banks and credit card companies do business. The technology behind it, known as blockchain, lets traders move transactions without the need of an intermediary.
Regardless, Lambert states he still hasn’t got any resistance from the industry about the company’s involvement. Cryptocurrencies are on the verge of becoming mainstream, but to get there, it will surely need to team up with the incumbent players first.
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