Visa, Mastercard Pause Crypto Push In Wake Of Industry Meltdown Sources

Visa, Mastercard Pause Crypto Push In Wake Of Industry Meltdown  Sources

FILE PHOTO: Representation of bitcoins as seen in the illustration © Thomson Reuters File photo. Representation of bitcoins as seen in the illustration

Manya Saini

(Reuters) – U.S. payments giants Visa and Mastercard are holding back plans to forge new partnerships with cryptocurrency companies after a series of high-profile falls that shook confidence in the industry, people familiar with the companies told Reuters.

The cryptocurrency industry experienced a stunning downturn in 2022, when the bankruptcies of industry giants FTX and BlockFi shocked investors and increased regulatory scrutiny of the industry.

Both Visa and Mastercard have agreed to delay the launch of some cryptocurrency-related products and services until market conditions and the regulatory environment improve, said the people, who asked not to be identified because the discussions are confidential.

"The recent high-profile bankruptcy in the cryptocurrency industry reminds us that we still have a long way to go before cryptocurrencies become a mainstream part of payments and financial services," said a spokesperson for Visa, the world's largest payment processor. .

FILE PHOTO: This image shows the cryptocurrencies Bitcoin, Ethereum and DogeCoin installed on a computer motherboard. © Thomson Reuters FILE PHOTO. This image shows the cryptocurrencies Bitcoin, Ethereum and DogeCoin located on a computer motherboard.

However, this does not change the company's cryptocurrency strategy and goals, the spokesperson added.

A Mastercard spokesperson said: "Our efforts continue to focus on the underlying blockchain technology and how it can be applied to solve current challenges and create more efficient systems."

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Over the past few years, major credit card companies have started using cryptocurrency as the asset class has become very popular, with some touting it as the next big thing in finance.

Card companies, which pocket a portion of the dollar value of the transactions they process, have announced several partnerships with cryptocurrency companies and created dedicated teams to study blockchain technology.

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In April, Mastercard partnered with cryptocurrency lender Nexo to launch what it called the world's first crypto-enabled payment card.

Visa completed its global credit card deal with FTX in November, just a month after announcing an expanded partnership with the exchanges.

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Card company American Express announced in 2021 that it would consider using cryptocurrency as a possible way to use reward points in the future.

But he doesn't see crypto-tokens as a short-term strategic priority, a source familiar with the matter said.

"We don't see crypto replacing our core payments and lending services in the near future," an AmEx spokesperson said in an emailed statement, adding that the company continues to explore significant uses for the technology.

"They cannot and should not move forward until there is a clear regulatory framework," said Thomas Hayes, president and managing partner of investment firm Greet Hill Capital.

“The delays are not related to their core business as it remains strong. This is due to the uncertain regulatory environment of cryptocurrencies and reduced demand/curiosity for cryptocurrencies in the near future.”

(Reporting by Mania Saini in Bangalore; Editing by Swetha Singh and Sowmyadeb Chakraborty)

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