The world’s payment giant Mastercard announced in an interview with CNBC that it will help financial institutions including banks offer cryptocurrency trading to their clients. The payment company wants to make it easier to allow banks to bring crypto to the masses.
Mastercard intends to act as a “bridge” between Paxos crypto trading platform and banks. PayPal already uses Paxos to offer crypto services within the UK.
Mastercard will take care of regulatory compliance and security. This is the reason banks are avoiding crypto.
Cryptocurrency is a popular topic among consumers.
The volatility of cryptocurrencies is high. There’s also the bear market currently triggered by Terra LUNA’s de-pegging its UST stablecoin. A number of crypto service providers, including Voyager Digital and Celsius, have filed for bankruptcy.
Mastercard believes, however, that there are still many potential customers who are interested in cryptocurrency.
Mastercard’s chief digital officer, Jorn Lambert, said that survey shows there is still a high demand for digital assets although about 60% of those interviewed would prefer trying out the space through established banks.
Jorn Lambert stated:
“There’s a lot of consumers out there that are really interested in this, and intrigued by crypto, but would feel a lot more confident if those services were offered by their financial institutions. It’s a little scary to some people still.”
Lambert also said the following:
“It would be shortsighted to think that a little bit of a crypto winter heralds the end of it — we don’t see that. As regulation comes in, there is going to be a higher degree of security available to the crypto platforms and we’ll see a lot of the current issues getting resolved in the quarters in the years to come.”
While banks have invested in crypto, they don’t offer it to their clients.
Morgan Stanley, Goldman Sachs, JPMorgan and other large investment banks have formed teams to study the crypto space, but have so far not offered the product for clients. Just last week, the CEO of JPMorgan, Jamie Dimon, referred to cryptocurrencies as “decentralized Ponzis” during an Institute for International Finance event.
If the banks embrace Mastercard’s partnership model through Paxos, it would mean more competition for popular crypto exchanges, especially those like Coinbase that operate in the US.
Mastercard will pilot the product in Q1 2023
Mastercard will pilot the product that will see it handle regulation by following crypto compliance rules, verifying transactions and providing anti-money-laundering and identity monitoring services in the first quarter of 2023.
Lambert refused to reveal the names of the banks that were selected for the pilot but said that the payment giant would continue expanding the product in other locations after the pilot.