Mastercard will help banks offer cryptocurrency trading

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 on Monday that will help financial institutions offer cryptocurrency trading, the company told CNBC. MasterCard will act 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 banks cite 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 several high-profile bankruptcies.

Mastercard’s digital chief 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 fascinated by crypto, but they would feel much more secure if these services were offered by their financial institutions,” Mastercard’s chief digital officer Jorn Lambert told CNBC. interview. “It’s still a little scary for some people.”

Big investment banks like it Goldman Sachs, Morgan Stanley and JP Morgan has dedicated crypto teams but has largely avoided offering it to consumers. Last week, JPMorgan CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis” at an Institute for International Finance event. If the banks adopt this Mastercard partnership model, it could mean more competition for Coin base 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 cryptography compliance rules, verifying transactions and providing anti-money laundering and security monitoring services. Mastercard will pilot the product in the first quarter of next year and then “swing the crank” to expand to 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 accessibility for crypto platforms will be higher and we will see many current issues resolved in the coming quarters.”

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 were ironically intended to disrupt banks and middlemen 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 commitment. Crypto is on the verge of “going mainstream” and still needs to join forces with the established companies to make it happen, he said.

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

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