• Visa and Mastercard’s seemingly bold foray into crypto is raising adoption sentiment about the industry, pushing sentiment across Bitcoin markets

Two of the world’s most recognized form of payment — Visa and Mastercard — both came out with major headlines this week that suggested the two payment giants may finally be thawing on their relationship with crypto, to the point that they may embrace it fully.

The news that Wirex became a principal member of Mastercard might not have raised many eyebrows, not least among Bitcoin users, since many already are familiar with Wirex being able to offer a crypto-enabled debit card. But the ability to spend crypto as easily as you would any other kind of fiat money, via a Visa or Mastercard brand debit or credit card, has been the holy grail of the crypto industry for many years.

These so-called Bitcoin or crypto cards have been around for a very long time, but to the savvy observer, the ability has always been provided through a third party. In Wirex’s case, their ability to offer crypto debit cards has always been through Wirecard — the very same fintech company embroiled in a staggering case of corruption and accounting malpractice that somehow vanished over EUR 2 billion in a scandal that continues to rock Germany and the world of finance.

And therein lies the problem. Without a direct relationship to either Visa or Mastercard — a principal partnership is what this is — all these crypto companies have been heavily reliant on the relationships of their third party providers to continue providing their services. So when Wirecard collapsed, Wirex, therefore, lost their Visa rights.

And so has been the case for many years with many crypto companies offering debit cards, whose services faced severe and sometimes permanent disruptions over the years as third-party providers lost their partnership deals. This explains why in 2016 and 2017, scores of companies launched ICOs and token sales to fund precisely that type of service.

But now, with Wirex gaining principal partner status, this means they have this direct relationship that others have been craving, following in the footsteps of Coinbase who earlier in the year also did the same deal, but with Visa.

So are Visa and Mastercard seemingly set to begin a real relationship with crypto, instead of doing deals with them via intermediaries? It would certainly seem so from these latest developments!

Visa itself has outlined a digital currency playbook in the same week which speaks volumes about the blockchain industry and goes as far as to state that crypto has a certain place in “the future of money”. It even hints at there being a possibility for crypto (remember that these two giants were also in talks with Facebook’s Libra project). With a global network of tens of millions of merchants, Visa declared that it was ready to extend their reputation as a financial innovator for over 60 years, saying:

“Extending this legacy into the decades ahead requires continuous innovation and collaboration…”

In a statement that announced the Wirex partnership, Raj Dhamodharan, Mastercard executive vice president on digital assets and blockchain, also said this move was just the latest step in the digital asset expansion campaign, which now sees other emerging crypto firms as potential principal members. Dhamodharan explained:

“The cryptocurrency market continues to mature … our work with Wirex and the wider crypto ecosystem is accelerating innovation and empowering consumers with more choice in the way they pay.”

Not everyone is convinced, though, that these two household names in personal finance will go on to issue their own digital assets on the blockchain.
While the technology is certainly being pursued (Mastercard has filed more than 80 blockchain patents while Visa has also filed over 20 related to DLT), regulations still provide a significant stumbling block.

As they themselves saw, US regulators stopped Libra dead in its tracks. Of course, Facebook already had a bad reputation with personal data and it could have been a biased and cynical view of corporate giants that led to that demise, so Mastercard and Visa may see themselves as more experienced and carrying more clout.

Visa CEO Alfred F Kelly did say before that it couldn’t see how Facebook would meet regulatory requirements, which suggests his company would know how to.

Whatever the future outcome, sentiment seems to have affected waves of countries too, with the Prime Minister of India, Narendra Modi, in the same week endorsing blockchain as a frontier technology. During his keynote address at the India Ideas Summit Modi played the siren as he spoke in a way to lure multinationals to invest in the world’s second largest economy. He declared:

“Opportunities in technology also include opportunities in the frontier technologies of 5G, Big data analytics, Quantum computing, Blockchain and Internet of things.”

Bitcoin and carkets have risen in the days following these developments, with Bitcoin rising to above USD 9,600 today and Ethereum punching through past USD 270.

You know investors and traders are happy when the word “bull” keeps surfacing!

 

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