The payments giant intends to make an announcement on Monday on a program that will assist financial institutions in offering bitcoin trading. According to the corporation, Mastercard will serve as a "bridge" between Paxos, a cryptocurrency trading platform already utilized by PayPal to deliver a service very similar to the one Mastercard would offer, and banks. Mastercard and Paxos will be responsible for handling regulatory compliance and security, which are two of the primary reasons banks cite for shunning the asset class.
There have been some consumers who have a dubious attitude. The volatility of cryptocurrencies such as bitcoin is well-known, and this year, the most valuable digital assets on the planet have together shed more than half of their value. Since January, the business has experienced hacking losses totaling billions of dollars, in addition to many high-profile bankruptcies.
Polling indicates that there is still demand for the asset, according to the chief digital officer of Mastercard; nevertheless, almost sixty percent of respondents said that they would prefer test the waters through their present banks.
In an interview with, the chief digital officer of Mastercard, Jorn Lambert, stated that "there's a lot of consumers out there that are really interested in this, and intrigued by crypto," but that these customers "would feel a lot more confident if those services were offered by their financial institutions." "It can make some individuals feel a little uneasy even now."
Large investment banks such as Goldman Sachs, Morgan Stanley, and JPMorgan all have crypto-specific teams, but they have, for the most part, refrained from extending their services to individual customers. When speaking at an event hosted by the Institute for International Finance just a week ago, JPMorgan CEO Jamie Dimon referred to cryptocurrencies as "decentralized Ponzis." It is possible that Coinbase and other cryptocurrency exchanges operating in the United States may face increased levels of competition if banks decide to adopt the model of the collaboration proposed by Mastercard.
The payments company has stated that its mission is to ensure that financial institutions remain in compliance with regulations by adhering to crypto compliance requirements, authenticating transactions, and offering anti-money laundering and identity monitoring services. The product will have a pilot run over the first three months of the next year, after which Mastercard will "crank the handle" to expand into further regions. Lambert did not disclose any information regarding the participating banks at this time.
Despite the fact that the industry is currently experiencing a bear market or "crypto winter," Mastercard's CEO claimed that an increase in activity in the future might lead to an increase in transactions and fuel the company's core business.
He stated, "It would be naive to assume that a little bit of a crypto winter heralds the end of it — we don't see that." "It would be shortsighted to think that a little bit of a crypto winter heralds the end of it." "As regulation is implemented, there will be a higher degree of security that is going to be available to the cryptocurrency platforms, and we'll see a lot of the existing difficulties getting fixed in the coming quarters and years,"
Both Mastercard and Visa have been on a collaboration binge in the crypto space recently. Mastercard has previously formed partnerships with Coinbase on NFTs and Bakkt to facilitate the provision of cryptocurrency-related services by financial institutions and retail establishments that are part of its network. The partnership between Visa and FTX to offer cryptocurrency debit cards in 40 countries was announced last week. Visa currently has more than 70 crypto partnerships. American Express has indicated that it is investigating the possibility of utilizing its credit cards and network with stablecoins, which are digital currencies whose value is tied to that of the dollar or another fiat currency.
Ironically, cryptocurrencies were designed to undermine traditional financial institutions and intermediaries like Mastercard and Visa. Blockchain, the technology that underpins these cryptocurrencies, enables transactions to take place without the need for middlemen. Nevertheless, Lambert stated that they have not observed any reaction from the sector on their involvement. He stated that cryptocurrency is "on the verge of actually being mainstream," but that in order for that to happen, it needs to work along with the companies who are already in the market.
According to Lambert, "it's impossible to assume that the cryptocurrency sector will truly go mainstream without embracing the traditional financial industry as we know it."