After making strides with its crypto-friendly services, Mastercard is taking charge and helping banks get involved. The top-ranking payments system is set to launch a program that will assist banks in providing crypto trading services.
The payments network will serve as a bridge between banks and Paxos, which is a crypto trading platform. Currently, PayPal is working with Paxos to provide a similar feature.
Meanwhile, Paxos and Mastercard will take care of regulatory compliance and security. These are the two main reasons banks avoid cryptocurrencies.
Consumers Still Skeptical About Embracing Crypto
Although banks and other financial institutions are doing their best to bring digital currency payments to users, some consumers are still skeptical.
Digital currencies like Bitcoin are notorious for their highly speculative nature and volatility. To make matters worse, most of the top cryptocurrencies lost more than half of their value in the last couple of months.
Since January, the cryptocurrency sector has faced numerous hacks that led to losses worth billions of dollars. Not to mention, various crypto-based companies declared bankruptcy, such as Celsius, a high-profile crypto lender.
Although research by Mastercard shows that there is a demand for crypto, over half of respondents stated that they would prefer to try out cryptocurrencies via their current banks.
Banks’ Involvement Could Raise Consumer Confidence
According to Jorn Lambert, the chief digital officer at Mastercard, plenty of consumers are interested in cryptocurrencies. However, they would feel more confident if their banks were to offer these services.
Despite some major investment banks like JPMorgan, Morgan Stanley, and Goldman Sachs having their own crypto teams, they’ve avoided the asset class for the most part.
Speaking at an event, Jamie Dimon, the CEO of JPMorgan, referred to digital currencies as ‘decentralized ponzis’ at the Institute for International Finance last week.
But if banks end up embracing cryptocurrencies, it could mean fierce competition for exchanges like Coinbase.
Mastercard Will Be Involved In Crypto Compliance
Mastercard says that its job will involve ensuring that banks are complying with crypto regulations, as well as providing identity monitoring and anti-money laundering services. They’ll also verify transactions.
As for implementation, Mastercard will conduct a pilot for the upcoming feature during Q1 of the next year. After that, they’ll begin expanding geographically to offer the service in more regions.
Even though the crypto market is experiencing the worst bear market to date, Lambert expects that crypto activity down the line could bring in more transactions that fuel the business.
Mastercard is optimistic that as agencies announce more regulation, the higher level of security will reassure consumers.
But Mastercard isn’t the only payments network partnering up for crypto collaborations. Just last week, payments giant Visa, along with FTX, geared up to offer crypto debit cards in 40 countries.