Feb 28 (Reuters) – U.S. payments giants Visa (VN) and Mastercard (MA.N) have signed new deals with cryptocurrency firms after a series of high-profile bankruptcies shook confidence in the industry. The company is putting the brakes on plans for a partnership, said a person familiar with the matter. He told Reuters about this.
The cryptocurrency industry witnessed a surprising reversal of fortune in 2022 as the bankruptcies of industry giants FTX and BlockFi rocked investors and increased regulatory scrutiny of the sector.
Both Visa and Mastercard have decided to delay the launch of certain products and services related to cryptocurrencies until market conditions and the regulatory environment improve, the people said, asking not to be identified.
A spokesperson for Visa, the world’s largest payment processor, said, “The recent high-profile failures in the crypto sector are a reminder that cryptocurrencies still have a long way to go to become part of mainstream payments and financial services. It’s an important event that will let me.”
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While that doesn’t change the company’s crypto strategy and focus, the spokesperson added.
A Mastercard spokesperson said:
Over the past few years, major card companies have come to tout cryptocurrencies as the next big thing in finance as the asset class explodes in popularity.
The card companies, which pocket a small percentage of the dollar value of the transactions they process, have announced multiple partnerships with crypto companies and deployed dedicated teams to research blockchain technology.
Mastercard partnered with cryptocurrency lender Nexo in April to launch what it calls the world’s first “cryptocurrency-backed” payment card.
In November, Visa terminated its global credit card agreement with FTX, just one month after announcing an expanded partnership with the exchange.
Card company American Express (AXP.N) said in 2021 that it would consider using cryptocurrencies as an option for redeeming points in the future.
However, it does not see crypto tokens as a short-term strategic priority, said a source familiar with the matter.
“In the short term, we do not believe that cryptocurrencies will replace our primary payment and lending services,” an Amex spokesperson said in an emailed statement, adding that the company does not see any significant potential for the technology. He added that they are still looking for usage examples.
“They cannot and should not move forward until there is a clear regulatory framework,” said Thomas Hayes, chairman and managing member of investment firm Great Hill Capital.
“The delay is not attributable to our core business, which continues to be strong. It is related to the uncertain regulatory environment for cryptocurrencies and the short-term decline in demand/interest in cryptocurrency services.” .”
Reported by Manya Saini, Bengaluru. Edited by Sweta Singh and Saumyadeb Chakrabarty
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