Mastercard is launching a program to let financial institutions offer cryptocurrency trading to their clients. Mastercard will act as a bridge between Paxos and banks. Mastercard’s program will handle regulatory compliance and security which are the two reasons banks avoid cryptocurrencies.
Mastercard (MA) has partnered with crypto trading platform Paxos to offer a program that will help financial institutions offer cryptocurrency trading, the payments company said Monday. Mastercard started the Crypto Source program, where it will help banks follow crypto compliance rules, verify transactions, provide anti-money-laundering and identity monitoring services.
The product will reportedly be piloted in the first quarter of 2023 before expanding to other locations.
Compliance and Security Major Issues for Banks and Users
Despite the downtrend in cryptocurrencies in the crypto market, there is still massive interest in this asset class, according to polling referenced by Mastercard’s chief digital officer. However, due to compliance and security reasons, users would rather use traditional banks, than enter the crypto trading space. This is why Mastercard is creating a safe space for this. Mastercard will assist in maintaining compliance with crypto-related rules, verify transactions, and provide anti-money-laundering and Know Your Customer checks.
The partnership aims for Paxos to provide crypto-asset trading and custody services on behalf of the banks, while Mastercard will leverage its technology to integrate those capabilities into banks’ interfaces, resulting in a seamless experience for the consumer.
“Our commitment is simple – to explore crypto and the underlying digital assets technology to support consumer choice in payments. Today is an exciting step in our crypto journey that draws on the strengths of our global businesses, from open banking and identity verification to analytics and fraud monitoring to settlement solutions. We’re excited to build on our long-term partnership with Paxos – co-innovating to bring safe and secure technology to financial institutions. Our crypto product innovations will provide choice at scale and continue to bring one-of-a-kind opportunities to financial institutions as they seek to offer new, advanced services to their customers.”said Jorn Lambert, Chief Digital Officer at Mastercard.
Financial Firms Heavily Pushing for Crypto
Recently, companies offering financial services are heavily investing in cryptocurrencies to provide services for regular users and businesses. Two companies putting in more efforts are Mastercard and Visa.
Earlier in October, Mastercard announced plans to debut a crypto-related fraud-prevention solution, dubbed Crypto Secure, for banks and card issuers. The product is powered by its recently acquired blockchain-security startup, CipherTrace. The CEO of Mastercard recently announced a cooperation with Binance that will soon allow consumers to pay for everyday items using Bitcoin. The partnership aims to make crypto payments available at any of the 90 million retailers that accept Mastercard.
Visa also partnered with crypto exchange Ripio to roll out their prepaid debit card that allows Ripio users to use their crypto holdings for traditional payments. The physical card allows users to make purchases in both digital and physical formats where Visa cards are accepted.