Good day everyone,
I hope you are all well and having a great day, welcome to CryptoGod-1's blog on all things crypto. The two main players in terms of global credit facilities, Visa and Mastercard, have decided to take a step back and distance themselves from the crypto space. Previously both had shown a keen interest in entering the space in terms of how they offer their credit facilities, such as credit cards, but due to the last year which has seen a collapse in the market, both are now applying the brakes in a move of caution.
Prior Interactions with Crypto
Previous the two largest players in the financial space, Visa and Mastercard, had put themselves in the spotlight with their views on crypto. As the popularity of the asset exploded throughout 2020 and 2021, they jumped on board with the rest who were claiming it to be the next big thing in finance. Considering card companies pocket a small percentage from the transactions they process, both decided to enter the space by announcing multiple partnerships with crypto firms. These were put in place to explore blockchain technology along with the firms.
Back in August 2021 Visa paid paid $150,000 worth of the cryptocurrency Ethereum to secure one of the Crypto Punks NFTs. The famed NFT from the collection was of a pixelated digital image of a woman with a mohawk. The NFT image is shown below, and at the time the NFT market had been booming.
In March of 2022 Visa aligned itself with NFT's once more, this time through the launch of their creators programme. This is a global programme which was launched to help groups such as artists and musicians scale their businesses through the creation and selling of NFTs over a one year long programme. At the time of launch Visa's head of crypto, Cuy Sheffield, stated:
“NFTs have the potential to become a powerful accelerator for the creator economy. We’ve been studying the NFT ecosystem and its potential impacts on the future of commerce, retail and social media. We want to help this new breed of small and micro businesses tap into new mediums for digital commerce.”
As for Mastercard, they teamed up with Crypto Lender Nexo in April 2022 to launch what it referred to as the world's first "crypto-backed" payment card. From there, in October 2022 they announced an initiative which would allow financial institutions offer cryptocurrency trading to their clients. The payments giant planned to work as a “bridge” between Paxos, a crypto trading platform already used by PayPal, and the banks.
While those are just some of the varying steps both firms took into the crypto space, it should also be noted that Visa had a partnership deal with FTX which it severed just a month later due to the collapse of the exchange which led to an overall crash in the crypto market.
Step Back
Due to the significant reversal in the markets over 2022, with bankruptcies of major industry players such as FTX and BlockFi, the sentiment in the market has been rocked and lowered to a completely less stable level. Both of the U.S. payment giants, Visa and Mastercard, have there decided it is in their best interests to slow down and halt any previous plans they had in terms of crypto. This includes plans to create new partnerships with crypto firms as they await further information on the impending regulatory scrutiny on the sector.
Both had plans to launch products, likely in the form of credit cards and crypto back loans, but due to the market conditions they have decided to wait until the regulatory environment improves. This makes sense, given the level of fraud and pure deceit within the crypto industry over the past couple of years. While their crypto strategy and focus has not changed, both made statements regarding their positions in the crypto industry:
Spokesperson for Visa:
"Recent high-profile failures in the crypto sector are an important reminder that we have a long way to go before crypto becomes a part of mainstream payments and financial services,"
Spokesperson for Mastercard:
"Our efforts continue to focus on the underlying blockchain technology and how that can be applied to help address current pain points and build more efficient systems."
Others in the financial space have also revived their positions on crypto of late. Card company American Express showed interest way back in 2021 of using crypto as a possible option to redeem reward points. However, that opinion has since changed and it is no longer taking crypto tokens as a strategic priority in the near-term.
While in the past the major players in the financial space such as Visa and Mastercard have shown a keen interest in crypto, even investing large sums into NFT's, they have since backed down on their praise for the space. While somewhat expected with the amount of bad actors who have emerged within the space over the last year and the crash of crypto prices, one should not write the asset off so quickly. While a lowering of time and money invested into crypto from such big firms is likely wise, they should not abandon the space just yet as there will be a rise from the ashes once again for cryptocurrencies.
Have a great day.
Peace. CryptoGod-1.
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