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 is determined to make it easier for banks to participate in bringing crypto to the masses.
Mastercard intends to act as a “bridge” between Paxos crypto trading platform and banks. Paxos is already being used by PayPal to offer crypto services in the UK.
Mastercard will handle security and regulatory compliance, which are the two main reasons why banks avoid getting involved in crypto.
Lots of consumers interested in crypto
Cryptocurrencies are highly volatile and there is also the current bear market that was triggered by the collapse of Terra LUNA following the de-pegging of its UST stablecoin. There has also been a string of bankruptcy filings by an array of crypto service providers like Celsius and Voyager Digital.
However, despite all these, Mastercard still believes that there are many customers out there that are interested in cryptocurrencies.
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.
During the interview with CNBC Jorn Lambert said:
“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:
“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.”
Banks have invested in crypto but avoid offering to clients
Large investment banks like Morgan Stanley, Goldman Sachs, and JPMorgan, have established teams to explore the crypto space but have so far avoided offering the product to 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 to pilot the product in Q1 of 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.
While Lambert declined to hint at which banks have been chosen for the pilot, he said that the payment giant will expand the product in more places after the pilot.