US payments giants Visa and Mastercard are holding back on plans to forge new partnerships with cryptocurrency firms after a series of high-profile crashes rocked confidence in the industry, people familiar with the matter told Reuters.
The cryptocurrency industry experienced an incredible turnaround in 2022 when i bankruptcies of the FTX industry majors and BlockFi have shaken up investors and increased regulatory scrutiny over the industry.
Both Visa and Mastercard have agreed to postpone 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 named as the talks were confidential. .
“The recent high-profile bankruptcies in the cryptocurrency industry remind us that there is still a long way to go before cryptocurrencies become part of traditional payments and financial services,” said a spokesperson for Visa, the largest of payments in the world.
However, this does not change the company's strategy and focus on cryptocurrencies, the spokesperson added.
A Mastercard spokesperson said: “Our efforts continue to focus on the underlying blockchain technology and how it can be applied to help solve current pain points and build more efficient systems.”
The withdrawal of cryptocurrencies
Over the past couple of years, major credit card companies have embraced cryptocurrencies following the explosion in popularity of this asset class, which some have touted as the next big thing in finance.
Credit card companies, which pocket a small percentage of the dollar value of the transactions they process, have announced several partnerships with cryptocurrency firms and have created dedicated teams to explore blockchain technology.
In April, Mastercard partnered with cryptocurrency lender Nexo to launch what it called the world's first "crypto-backed" payment card.
Visa ended its global credit card deals with FTX in November, just one month after announcing an expanded partnership with the exchange.
Card company American Express said in 2021 that it would consider using cryptocurrencies as a possible option to redeem rewards points in the future.
But he doesn't view crypto tokens as a near-term strategic priority, said a source familiar with the matter.
“In the near term, we don't see cryptocurrencies replacing our core payment and lending services,” an AmEx spokesperson said in an emailed statement, adding that the company continues to explore significant use cases for the technology. .
“They cannot and should not proceed until there is a clear regulatory framework,” said Thomas Hayes, chairman and managing partner of investment firm Great Hill Capital.
“The delays are not attributable to their core business, which remains strong. They are related to an uncertain regulatory environment for cryptocurrencies and declining demand/interest for cryptocurrency services in the near term.”