Mastercard will help banks offer cryptocurrency trading

Mastercard is looking to bring crypto to the masses by making it easier for banks to get involved.

The payments giant plans to announce a program on Monday that will help financial institutions offer cryptocurrency trading, the company told CNBC. MasterCard will act as a “bridge” between Paxos, a crypto trading platform already used by PayPal to offer a similar service, and banks, according to the company. Mastercard will handle regulatory compliance and security – two main reasons banks cite for avoiding the asset class.

Some consumers have also been skeptical. Cryptocurrencies like bitcoin is notorious for volatility, and the world’s top digital assets have lost more than half their value this year. The industry has suffered billions in hacks since January, coupled with several high-profile bankruptcies.

Mastercard’s digital chief said polling still shows demand for the asset, but about 60% of respondents said they would rather test the waters through their existing banks.

“There are a lot of consumers out there who are really interested in this, and fascinated by crypto, but would feel a lot more confident if these services were offered by their financial institutions,” Mastercard’s chief digital officer, Jorn Lambert, told CNBC. interview. “It’s still a little scary for some.”

Big investment banks like Goldman Sachs, Morgan Stanley and JPMorgan has dedicated crypto teams but has largely avoided offering it to consumers. Just last week, JPMorgan CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis” at an Institute for International Finance event. If banks embrace this Mastercard partnership model, it could mean more competition Coin base and other exchanges operating in the United States

The payments company said its role is to keep banks on the right side of regulation by following crypto compliance rules, verifying transactions and offering anti-money laundering and identity monitoring services. Mastercard will pilot the product in the first quarter of next year, and then “turn the handle” to expand to more geographies. Lambert declined to say which banks have signed up so far.

While the industry is living through a bear market or “crypto winter,” Lambert said more activity down the road could lead to more transactions and fuel Mastercard’s core business.

“It would be short-sighted to think that a bit of a crypto winter heralds the end of it – we don’t see that,” he said. “As regulation comes in, there will be a higher degree of security available to the crypto platforms, and we will see many of the current issues resolved in the quarters for years to come.”

Mastercard and Visa have both been on partnership trips in crypto. Mastercard has already teamed up with Coinbase on NFTs and Bakkt to allow banks and merchants in its network to offer crypto-related services. Last week, Visa partnered with FTX to offer crypto debit cards in 40 countries and has more than 70 crypto partnerships. American Express has said it is exploring using the cards and network with stablecoins, which are pegged to the price of a dollar or another fiat currency.

Cryptocurrencies, ironically, were meant to disrupt banks and middlemen like Mastercard and Visa. Their underlying technology, blockchain, allows transactions to move without intermediaries. Still, Lambert said they haven’t seen the industry backslide on their commitment. Crypto is about to really go mainstream, and still needs to join forces with the incumbents to get there, he said.

“It’s hard to believe that the crypto industry will really go mainstream without embracing the financial industry as we know it,” Lambert said.