US payments giants Visa and Mastercard are putting the brakes on plans to forge new partnerships with cryptocurrency firms after a series of high-profile collapses shook faith in the industry, people familiar with the matter told Reuters.
The crypto industry saw a surprising reversal of fortunes in 2022, as the bankruptcies of majors FTX and BlockFi spooked investors and increased regulatory scrutiny of the sector.
Both Visa and Mastercard have decided to delay the launch of some crypto-related products and services until market conditions and the regulatory environment improve, said the people, who asked not to be identified as the conversations were confidential.
“Recent high-profile cryptocurrency failures are an important reminder that we have a long way to go before crypto becomes part of mainstream payments and financial services,” said a spokesperson for Visa, the world’s largest payment processor.
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This does not change the company’s strategy and focus on crypto, however, 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 address today’s pain points and create more efficient systems.”
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Over the past couple of years, major credit card companies have warmed to crypto as the asset class’s popularity soared, with some touting it as the next big thing in finance.
The card companies, which pocket a small percentage of the dollar value of the transactions they process, had announced multiple partnerships with crypto firms and created special teams to explore blockchain technology.
Mastercard partnered with crypto lender Nexo in April to launch what it called the world’s first “crypto-enabled” payment card.
In November, Visa ended its global credit card deals with FTX, just a month after announcing an expanded partnership with the exchange.
Credit card company American Express said in 2021 that it would consider using crypto as a possible option for redeeming rewards points in the future.
However, he does not see crypto tokens as a strategic priority in the near term, said a source familiar with the matter.
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“In the short term, we don’t see crypto replacing our core payment and lending services,” an AmEx spokesperson said in an emailed statement, adding that the company continues to explore important use cases for the technology.
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“They cannot and should not proceed until there is a clear regulatory framework,” said Thomas Hayes, chairman and managing director of investment firm Great Hill Capital.
“The delays are not attributable to their core business – as that remains strong. They are related to an uncertain regulatory environment for crypto and demand/interest in crypto services declining in the short term.”
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