Mastercard has debuted a service that will let consumers buy and sell digital assets through their bank accounts, potentially paving the way for thousands of finance firms to offer crypto trading for the first time.
The product, called Crypto Source, will start in the US, Israel and Brazil early next year through a pilot programme, Ajay Bhalla, Mastercard’s president of cyber and intelligence, said in an interview. He declined to say which banks would be the first to participate.
While banks have been warming up to crypto over the past few years, the vast majority have shied away from holding virtual currencies and offering them to their retail clients because of regulatory concerns. But with thousands of bank partners, Mastercard’s service could help cryptocurrencies gain more mainstream adoption.
Being able to buy crypto “from your own bank where you have your bank account is a very big need from the market and something consumers want”, Bhalla said.
Crypto Source will be offered through a partnership with digital-asset company Paxos Trust, which will provide virtual currency trading and custody services on behalf of the banks. That means lenders won’t be holding the assets on their balance sheets.
A rout in cryptocurrency markets has triggered a series of bankruptcies, layoffs and failures in the sector. The crash has wiped out almost US$2-trillion from the market value of crypto, but hasn’t yet deterred large financial firms from offering products and services in the space. Late last month, for example, exchange operator Nasdaq said it would start offering digital assets custody services to its clients.
Latest foray
The new product is only Mastercard’s latest foray into cryptocurrencies. The company said in February it would hire more than 500 people this year as it expands its data and services unit, an effort that will include launching a consulting practice focused on crypto.
Last year, the Purchase, New York-based company made it easier for banks to offer cryptocurrency rewards on their credit and debit cards by inking a deal with Bakkt. Mastercard also began allowing start-ups focused on crypto and digital assets to join its Start Path programme, which gives fledgling companies access to the network’s executives and technology to help them grow. — Anna Irrera and Jenny Surane, (c) 2022 Bloomberg LP