The crypto industry took a hit in 2022 following the bankruptcies of significant players FTX and BlockFi, sending shockwaves through investors and sparking increased regulatory scrutiny. Both Visa and Mastercard have decided to delay the launch of certain products and services related to crypto until market conditions improve and the regulatory environment is more favorable.
Visa, the world’s largest payment processor, stated that while the recent failures in the crypto sector are a reminder of the long road ahead, their crypto strategy and focus remain unchanged. Mastercard echoed similar sentiments, emphasizing that their efforts are still focused on exploring how underlying blockchain technology can help address current issues and create more efficient systems.
Regulatory framework uncertainty leads to delays in crypto adoption by card firms
In recent years, major credit card companies have shown an increased interest in crypto assets as their popularity has surged. With some claiming it to be the next big step forward in finance, these card firms have teamed up with numerous crypto firms and assigned dedicated teams to research blockchain technology. Furthermore, they gain a small percentage of each transaction they process.
In April 2022, Mastercard joined forces with Nexo to launch the world’s first “crypto-backed” payment card. Then in November, Visa ended its global credit card agreements with FTX—just one month after announcing an increased collaboration with the exchange.
Card company American Express is exploring the possibility of using crypto to redeem reward points in the future, but it is not currently making this a priority. An American Express spokesperson said that, for now, crypto is not expected to replace its core payment and lending services.
Thomas Hayes, chairman and managing member at investment firm Great Hill Capital, noted that the company cannot and should not advance until a clearer regulatory framework is in place. He added that delays are due to an uncertain crypto environment and declining demand for crypto services. Nevertheless, American Express said it would continue to explore meaningful use cases for crypto technology.
There is no doubt that despite the interest these card services have in crypto, regulatory uncertainty around crypto might lead to more delays in worldwide adoption.
