Mastercard will help banks offer cryptocurrency trading | Techy Kings

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The 3D printed Mastercard logo is seen in front of the stock graph displayed in this illustration taken on September 20, 2021.

Dado Ruvic | Reuters

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

The payments giant plans to announce a program Monday that will help financial institutions offer cryptocurrency trading, the company told CNBC. MasterCard will act as a “bridge” between Paxos, the crypto trading platform already used by PayPal to offer similar services, and banks, according to the company. Mastercard and Paxos will handle regulatory compliance and security — the two main reasons banks cite for avoiding the asset class.

Some users are also skeptical. Cryptocurrencies like bitcoin notorious for volatility, and the world’s leading digital assets have lost more than half their value this year. The industry has seen billions in hacks since January, plus several high-profile bankruptcies.

Mastercard’s chief digital officer said polling still showed demand for the asset, but about 60% of respondents said they would prefer to test the waters through their existing bank.

“There are a lot of consumers out there who are really interested in this, and are interested in crypto, but would feel more confident if the service was offered by their financial institution,” Mastercard’s chief digital officer, Jorn Lambert, told CNBC in an interview. . “It’s a little scary for some people.”

Big investment banks like Goldman Sachs, Morgan Stanley and JPMorgan has a dedicated crypto team but largely avoids offering it to users. Just last week, JPMorgan CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis” at an Institute of International Finance event. If banks really accept this Mastercard partnership model, this could mean more competition for Coinbase and other exchanges operating in the US

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The payments company says its role is to ensure banks are on the right side of the rules by following crypto compliance rules, verifying transactions and providing anti-money laundering and identity monitoring services. Mastercard will pilot the product in the first quarter of next year, then “tighten the handle” to expand in more geographies. Lambert declined to say which banks have signed up so far.

Although the industry is living through a bear market or “crypto winter,” Lambert said more activity ahead could lead to more transactions and drive Mastercard’s core business.

“It’s short-sighted to think that a little crypto winter marks the end — we don’t see that,” he said. “As regulations come in, there will be a higher level of security available to crypto platforms and we will see many of the current issues resolved in the coming quarters.”

Mastercard and Visa have both partnered in crypto. Mastercard has already partnered with Coinbase on NFT and Bakkt to allow banks and merchants in its network to offer crypto-related services. Last week, Visa partnered with FTX to offer crypto debit cards in 40 countries and has more than 70 crypto partnerships. American Express has said it is exploring using its cards and network with stablecoins, which are pegged to a dollar or other fiat currency.

Cryptocurrencies, ironically, aim to disrupt banks and middlemen like Mastercard and Visa. Their underlying technology, blockchain, allows transactions to move without intermediaries. However, Lambert said they have not seen industry push back against their involvement. Crypto is “on the cusp of really becoming mainstream,” and still needs to work with incumbents to get there, he said.

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

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