On October 17, Mastercard introduced Crypto SourceTM, an extension of the company’s secured and trusted services that aims to bridge the gap between decentralized cryptocurrencies and financial institutions. More specifically, it will connect Paxos, a crypto trading platform, with regular banks.
The payments giant is looking to help financial institutions offer crypto trading capabilities to their clients. Jorn Lambert, Mastercard’s chief digital officer, stated that the polls are still showing a growing interest in blockchain and crypto, despite the market’s volatility and all the recent downturns.
However, he goes on to say that “roughly 60% of respondents said they would rather test the waters through their existing banks.”
“There’s a lot of consumers out there that are really interested in this, and intrigued by crypto, but would feel a lot more confident if those services were offered by their financial institutions. It’s a little scary to some people still.”
So far, banks have been hesitant about the crypto asset class, mainly due to regulatory concerns and security. That’s where Mastercard and Paxos come into play.
According to Mastercard, the company’s role in the new program will be to ensure banks stay on the right side of regulation by sticking to crypto compliance rules. The payment giant will provide anti-money-laundering and identity monitoring services, as well as verify all transactions as they come through.
With a company such as Mastercard by their side handling all security and regulatory concerns, more banks might be willing to offer crypto trading to their clients.
However, not every mainstream financial institution refused considering crypto. Large investment banks the likes of JPMorgan and Goldman Sachs already have dedicated crypto teams on standby. For now, they still haven’t felt like extending crypto services to their clients. On the contrary, they’ve shown a measure of resentment towards all things crypto.
Last week, JPMorgan CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis,” clearly indicating how financial institutions feel about these assets, despite having teams of experts for just that purpose.
Indeed, the industry has been through some rough times recently, so much as to refer to 2022 as the year of “crypto winter.” Lambert feels like issues such as the volatility of the crypto market and recent violent downturns are blown out of proportion.
“It would be shortsighted to think that a little bit of a crypto winter heralds the end of it -- we don’t see that. As regulation comes in, there is going to be a higher degree of security available to the crypto platforms and we’ll see a lot of the current issues getting resolved in the quarters in the years to come.”
It remains to be seen how two diametrically opposed concepts will come together under Mastercard’s watchful eye.
