The crypto winter is freezing the ardor of traditional payment players. Visa and Mastercard have thus decided to curb partnerships in the crypto market, according to sources familiar with the matter cited by Reuters. The two American payment card giants have also chosen to postpone the launch of certain cryptocurrency-related products and services until market conditions and the regulatory environment are more favorable, according to these same sources.
The cryptosphere is emerging from a chaotic year 2022, marked by numerous scandals, in particular that of the FTX platform which symbolized the excesses of certain players in the sector. Faced with a serious crisis of confidence, the ecosystem of cryptoassets finds itself under pressure, while traditional banking and financial institutions had launched initiatives and partnerships around digital currencies. Last year, Mastercard notably teamed up with crypto lending company Nexo to launch a cryptocurrency-backed payment card, while Visa partnered for a debit card program with Sam Bankman’s FTX platform. -Fried, before backtracking before his collapse.
Unchallenged Crypto Strategies (Yet)
Admittedly, not everything has to be redone, but it will take time to restore confidence. “Recent high-profile failures in the crypto industry are an important reminder that we still have a long way to go before crypto becomes part of mainstream financial services and payments”, a Visa spokesperson told Reuters. However, he specifies that this does not change the strategy and orientation of the company vis-à-vis cryptocurrencies. For its part, Mastercard provides “focus on the underlying blockchain technology and how it can be applied to help solve current problems and build more efficient systems”.
Visa and Mastercard are now waiting for the crypto industry to regain serenity and for regulators around the world to put in place a more comprehensive regulatory framework. Indeed, the introduction of new rules could prevent scandals like FTX from happening again in the future. This is what the MiCA (Markets in Crypto-Assets) regulation must allow in the European Union by 2024. But the challenge for international financial authorities is to regulate without hindering innovation in the sector, which is not an easy task in the current context.